THE INTERNATIONAL DIMENSION and domestic policy

 THE INTERNATIONAL DIMENSION
While the discussion above has examined how domestic policy may be used to promote the development
and dissemination of technology, it has been a hotly debated issue as to whether – and if so how –
international collaboration may facilitate the process. This section examines these issues, considering both
the question of collaboration amongst countries, and then the broad question of international spillovers
resulting from action undertaken by countries. Finally, current and possible future policy efforts in this
field are investigated.
5.1 International collaboration
Low- or no-carbon emitting energy technologies have many characteristics of a public good – especially
when the carbon externality is not reflected in prices. They are thus likely to be provided in greater
quantity through international collaboration. For the same reasons that justify government financing of
research and development efforts, international co-operation in this field may generate important benefits.

 Within a global agreement, countries are likely to provide more subsidies than they would in isolation:
basic research and development, with relatively long payback periods (although high benefits) can best be
supplied co-operatively. Essentially, the rationale for such co-operation is the same as for public spending
in this area: as innovation is difficult to protect from spillover to competitors, there is little incentive for
first movers. Thus, to promote action and limit free-riding, a co-operative approach makes sense.
In some cases, international collaboration and cost sharing seems to be a prerequisite for risky and/or
expensive investments into radically new technologies. An example might be that of the ITER experiment
– a step towards the development of fusion energy. Cost-sharing might also take a different form: that of
sharing the learning investments necessary to reduce costs of new energy technologies and allow them to
penetrate the marketplace.
In many other cases, international collaboration simply avoids duplication of efforts and facilitates
information exchanges. Such co-operative ventures are provided by the IEA’s “implementing agreements”
(IAs) – more than 40 international collaborative energy research, development and demonstration projects.
Gathering various sets of Member and non-Member countries, 15 IAs cover the energy end-use
technologies, 9 IAs cover the renewable energy technologies (including one IA on hydrogen), 8 IAs cover
the nuclear fusion technologies, 5 IAs cover the fossil fuels technologies (including clean coal and CO2
capture and storage) and 4 IAs are devoted to the dissemination of information. 5
There is little doubt that more could be done in this respect. New international agreements focusing on
climate backstop technologies could, inter alia, aim at linking together existing technology promotion
efforts 

– for example, those introduced by the G8 strategy to promote renewable energy sources, and the
still embryonic technology transfer mechanisms under the Climate Convention (see below). Such links
might provide a more organised and aggressive strategy to speed up the development and dissemination of
these technologies than that offered by independent national efforts. The focus of such an effort would be
on accelerating the “learning-by-doing” process that might bring technologies more rapidly into the
markets.

5
See the IEA website: www.iea.org and more specifically www.iea.org/techno/index.htm. See also IEA, 2002f for a
status report. See also IEA, 1999 for a sampling of success stories.
COM/ENV/EPOC/IEA/SLT(2003)4
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A proposal for all countries to commit themselves to reach some agreed percentage of renewable energy
sources in their primary energy supply was partly intended to accelerate learning by doing from accelerated
deployment. It was supported at the recent World Summit on Sustainable Development by the EU and
some developing countries, but opposed by other Member countries and most developing countries. Those
opposing the agreement expressed concerns about a “one size fits all” approach and called for a flexible
approach to increasing the use of renewable energy. In addition, developing countries suggested that any
agreement exclusively focused on renewable energy would divert attention away from their primary goal
of ensuring universal access to energy services for the poor.

 As a consequence of this opposition, the
Summit did not establish any formal commitments.
A number of recent proposals have been made for technology-based international agreements as successors
to the Kyoto Protocol. Scott Barrett (2001) suggests the negotiation of a new agreement focusing on R&D
funding. While such an agreement might complement the current Kyoto Protocol, Barrett maintains that
over time it could fully replace it. Under his proposal, base-level contributions would be determined on the
basis of both ability and willingness to pay, and could be set according to the United Nations scale of
assessments. To provide incentives for participation, each country’s contribution to the collaborative effort
would be contingent on the total level of participation. The research emphasis would be on electric power
and transportation. This would be a “push” programme for R&D – a dimension absent from the Kyoto
approach.
However, Barrett also proposes a complementary “pull” incentive to encourage compliance and
participation. He suggests that the most attractive approach would be to agree on common standards for
technologies identified by the collective R&D effort, and established in complementary protocols. As
examples, energy efficiency standards could be established for automobiles, requiring the use of new
hybrid engines or fuel cells, or standards for fossil fuel fired power plants might require capture and
storage.
A standards-based approach was also advocated by Edmonds (1999, 2002) and Edmonds & Wise (1999).
Under their hypothetical protocol, any new fossil fuel electric power plant and any new synthetic fuels
plant installed in industrialised countries after 2020 would be required to capture and dispose of any carbon
dioxide from its exhaust stream or conversion processes.

 Developing countries would undertake the same
obligations when their per capita income equals the average for industrialised countries in 2020 in
purchasing power parity terms.
The most problematic aspect of such a strategy might be one of credibility – a problem inherent in
approaches based on still-to-be-developed technologies (see discussion above). No less important is the
cost issue. Edmonds & Wise themselves recognise that the cost of achieving a given concentration level
with such a protocol would be 30 per cent higher than the economically efficient cases of taxes or tradable
permits. This estimate may even be too low, as the structure of the agreement would not encourage some
of the most cost-effective energy efficiency improvements. In addition, the politics of some technology
proposals may make them difficult to implement – particularly if they tend to disadvantage specific – and
politically powerful – segments of the economy. Thus, for example a technology proposal that calls for
phasing out coal may meet the same experience as faced in England or Germany where closing down even
money-losing coal mining operations is a process that takes decades.