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

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?

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)

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

Context and forms of TOAs Type 1: Knowledge sharing and coordination Carbon Sequestration Leadership Forum (CSLF) and the International Platform on the Hydrogen Economy (IPHE) Methane to Markets Partnership (M2M) Task sharing within IEA Implementing Agreements (IEA-IA) Asia-Pacific Partnership on Clean Development and Climate (APP) Energy Star bilateral agreements Type 2: RD&D European Organization for Nuclear Research (CERN) ITER fusion reactor Cost sharing within IEA Implementing Agreements (IEA-IA) The Solvent Refined Coal II Demonstration Project (SRC-II) Type 3: Technology transfer Multilateral Fund under the Montreal Protocol Global Environment Facility (GEF) Type 4: Technology incentives, mandates, standards International Convention for the Prevention of Pollution from Ships (MARPOL) European Union Renewables Directive

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

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

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

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