Based on the practice and experience in other international law and policy processes such as the Montreal Protocol, WIPO or WTO, how could individual countries report on the actual transfer of technology to developing countries in the UNFCCC context?

Summary:

Article 13, paragraphs 9, 11 and 12 of the Paris Agreement contains a framework for developed country parties to report on financial, technological transfer and capacity building support provided to developing country parties, and for that information to undergo a technical expert review.

Since the early 1970s, a number of international treaties have sought to stimulate the international transfer of technology to combat global environmental problems. However, recording and reporting the actual transfer of technology to developing countries receives differing treatment under the Montreal Protocol, the WIPO, the WTO and the UNFCCC.

Article 9(3) of the Montreal Protocol requires all parties to report on a two-yearly basis on their compliance with Article 9(1) (cooperation on R&D and exchange of information). However, unusually, the Montreal Protocol does not require parties to report on technology transfer (under Art.10A). However, its link between financial support for developing countries and technological transfer should be considered for use in the UNFCCC context. A set proportion of UNFCCC financial support should be (we argue) required to support technology transfer.

WIPO is contributing significantly to international law, policy and practice through its implementation of the WIPO Development Agenda Recommendations. The WIPO GREEN database could be used in the UNFCCC context by an independent verification body to monitor and verify reporting on climate technology transfer.

The Word Trade Organization (WTO) requires developed country members to submit annual reports to the Council of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on the actions taken or planned to provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed countries (Art. 66.2 TRIPS).

The reports illustrate an approach to reporting but provide very limited information on quantitative measurements. UNFCCC parties could build on Art.66.2 TRIPS reporting, by supplementing it with quantitative information relevant to the UNFCCC context and requiring developed countries to report on the monetary value of incentives provided in support of technology transfer to developing countries.

 An underpinning issue is the access to intellectual property rights (IP rights) and the balance between limiting (through exclusivity) and enabling (through licensing to third parties) disclosure. We would argue that, since IP rights underpin all climate technology, any reporting or verification of technology transfer in the UNFCCC context should include an element of reporting/verification of IP rights. As a common, reportable element, the UNFCCC technology framework should include mandatory reporting of the number of patents, licenses and other IP rights that have supported the technology transfer to developing countries.

Advice:

1. Technology Transfer

Since the early 1970s, ongoing efforts have been made to stimulate the international transfer of technology to combat global environmental problems. Technology transfer includes:

• the intentional passing on of technology or know-how from one party to another, commonly by purchase, investment or agreements for cooperation;[1]
• transfer of technical knowledge from one place to another;
• the process of dissemination and absorption of commercial technology;
• flows of know-how, experience and equipment among different stakeholders; and
• the process of learning to understand, utilize and replicate technology.

Technology transfer occurs through:

• physical assets (plants, machinery, equipment)
• information relating to process, technology, design, operating methods, quality control and market characteristics; as well as
• human skills.

2. UNFCCC context

Within the UNFCCC process, the development and transfer of climate technology to developing country parties has a long-standing role in parties’ commitments on mitigation and adaptation. The UNFCCC, Kyoto Protocol and Paris Agreement all contain provisions on technology development and transfer. The Technology Mechanism, established in Cancun in December 2010, was set up to further facilitate and support countries in their efforts to enhance climate technology development and transfer.

The Paris Agreement requires parties to strengthen cooperative action on technology development and transfer (Art.10.2); it establishes a technology framework (Art.10.4) to provide overarching guidance to the work of the Technology Mechanism, which will serve the Agreement. The framework is undergoing elaboration and definition through the Subsidiary Body for Scientific and Technological Advice. This should include rules on measuring, reporting and verification (MRV).

In relation to reporting more specifically, the Agreement provides that developed country Parties shall, and “other parties” should, report on financial, technology transfer and capacity-building support provided (Art.13.9) and developing country Parties should provide information on support needed and received (Art.13.10).

In this context, developed country reporting under the UNFCCC would benefit from:

• clear guidelines on what to measure and report;
• methods for how to measure and report; and
• clearer separation of technology transfer from financial and capacity building obligations.

In addition, any reporting or verification of technology transfer under the UNFCCC should include an element of reporting/verification of IP rights. IP rights underpin all climate technology but they may also limit the transfer of that technology.

New technologies arise in many different fields, and are driven by private investment, universities, government action and also through cross-country collaboration. With such a diverse factual basis, IP rights are a constant factor, and should be at the heart of reporting and independent verification. As a common, reportable element, the UNFCCC technology framework should include mandatory reporting of the number of patents, licenses and other IP rights that have supported technology transfer to developing countries.

3. Montreal Protocol

The Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) was agreed on 16 September 1987 and entered into force on 1 January 1989. It requires countries to take concrete action to control ozone-depleting substances. It contains a number of innovative environmental law mechanisms, including the close formal integration of scientific, economic and technological factors, alongside effective controls and compliance procedures.

Technological innovation (for example the development of chemical substitutes for ozone-depleting substances, or the development of new processes and products) lies at the heart of compliance with the Montreal Protocol. Intellectual property rights have been identified as a challenge that needs further consideration.

The Montreal Protocol provisions which are relevant for our purposes are:

• Art.9 requires parties to cooperate in the promotion of research, development and exchange of information. Under Art.9.3, parties report to the Secretariat on a two-yearly basis on their activities in compliance with Art.9.
• Art.10 establishes a multilateral fund to facilitate technical cooperation and technology transfer. It is an example of the integration of technology transfer and financial assistance to developing countries. We consider that this linkage is an important element that should be incorporated into the general UNFCCC framework including the Paris Agreement.
• Article 10A requires each party to take ‘every practical step’ to ensure that substitutes and related technologies are expeditiously transferred under ‘fair and most favourable conditions’ to developing countries. There is no obligation to report on the transfer of substitutes and related technologies.
• In contrast, provisions on reporting of production, export and import of controlled substances under Art.7 are more specific. Key features are:
  • data reporting is mandatory;
  • differentiated reporting requirements between parties, depending on which Amendments have been ratified;
  • clear guidance on what is to be reported (with the UNEP providing Data Forms and a Handbook), coupled with a set date when a party’s annual report is due; and
  • consequences of non-reporting.

We consider that all key features of recording and verifying compliance under Article 7 of the Montreal Protocol have merit in applying to the reporting of UNFCCC technology transfer.

4. World Intellectual Property Organisation

WIPO is a self-funding agency of the United Nations, established in 1967 by the WIPO Convention. WIPO’s original objective was to promote the protection of intellectual property throughout the world. Whilst many WIPO Development Agenda Recommendations are relevant to technology transfer to developing countries[2], none of them direct WIPO to gather independent information that could verify the actual transfer of technology to developing countries.

WIPO established WIPO GREEN in 2013 as a new marketplace for sustainable technology. Branded as a global platform for open innovation and diffusion of green technologies, the WIPO GREEN database provides easily accessible information about sustainable technology[3]. In the UNFCCC context, a tool such as WIPO GREEN could contribute towards independent verification of country reporting technology transfer to developing countries. 

5. World Trade Organisation

The WTO takes the approach that technological advance improves global economic growth and development. Various WTO agreements contain provisions relating to aspects of the transfer of technology to developing and least developed countries. Most relevant for our purposes is the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) pursuant to which developed countries are to offer incentives (e.g. tax relief) to corporations in their territory to stimulate the transfer of technology to least developed countries (Article 66.2).

Under TRIPS developed country parties are required to submit annual reports to the TRIPS Council on the actions taken or planned in relation to their commitments to offer incentives to incentivise technology transfer under Article 66.2. In general, they report on the policy objectives and outcomes of the various projects undertaken by the member countries and participating institutions. There is no standard method of reporting, but they usually provide clear indications of progress and success for each project.

They include, for example, the following information:

• A substantive description of the project content, policy objective and purpose;
• The government agencies or institutions providing incentives for technology transfer;
• Participating enterprises, institutions and targeted member countries;
• The type of incentive measures – e.g. government funding of research;
• The field or sector of technology transfer activities and a description of the specific type of technology transfer – e.g. new bamboo-based prefabricated housing technology;
• The expected outputs and outcomes as a result of the transfer of technology, which depending on the project may include a quantitative element (e.g. number of beneficiaries);
• The budget and funds allocated; and
• The duration and status of the project.

Overall, they focus on a qualitative description of the project and indicate objectives and successes. While there are limitations to these reports, particularly in terms of specific quantitative measurements (some reports quantify outputs but they do not provide information on patent transfers), as well as budget and duration measurements, they illustrate how such reporting could be undertaken in the UNFCCC context. This should be supplemented with quantitative information relevant to that context and the monetary value of incentives provided in support of technology transfer to developing countries.

__________________________________________

[1] Andersen S O, Sarma K M and Taddonio K N 2007, Technology Transfer for the Ozone Layer: Lessons for Climate Change, Routledge p. 5.

[2] See in particular Recommendations 5, 9, 31, 33, 38 and 41, available at http://www.wipo.int/ip-development/en/agenda/recommendations.html

[3] Examples include a Kenyan company posting a “need” in the Energy/Bioenergy category, for assistance with ‘additional production facilities in multiple countries for non carbonized biomass briquette production”; a German university offering for licence/ sale/ R&D collaboration an innovative method for increasing the efficiency of solar cells; and a Japanese corporation has developed a pollution reduction apparatus that disposes of waste plastic through heating.