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CDM AND ITS SUCCESS IN TECHNOLOGY

TRANSFER
INTRODUCTION

The clean development mechanism (CDM) was designed right from the beginning to meet multiple objectives.
The CDM registers projects that reduce emissions and enhance removals of greenhouse gases, leading to
certified emission reductions (CERs) that are tradable on carbon markets A key, complementary objective is
that the CDM is to assist developing countries in achieving their sustainable development. There are many co-
benefits of the investment in climate change mitigation projects channelled through the CDM towards
developing countries, most important being the transfer of technology that is not already available in the host
countries.

STATISTICS ON TECHNOLOGY TRANSFER THROUGH CDM

A recently conducted study reveals the extent of technology transfer that has occurred through the CDM.
Overall, 30% of all projects in the pipeline, accounting for 48% of estimated emission reductions, involve
technology transfer. The rates of transfer vary considerably by project type, with for example only 13% of
Hydro projects versus all N2O projects showing technology transfer. Similarly, significant numbers of projects
involving technology transfer include 34% for both Biomass Energy and Wind projects, 78% of Methane
Avoidance projects, 39% of Energy Efficiency (Own Generation) projects and 82% of Landfill Gas projects
involve technology transfer. Within any particular project type, technology transfer is generally more strongly
associated with larger projects for almost all project types.

CDM has grown rapidly since its initiation and widespread acceptance post 2005. The technology transfer was
more common during the early years of the CDM than it is today. This decline in technology transfer through
the CDM is particularly evident for the three countries with the most CDM projects – China India and Brazil. In
case of Chinese projects where technology transfer has happened, over 90% of projects entered the pipeline in
2004 and 2005. The rate in 2009 and 2010 dropped to only 14% of projects. Brazil and India show similar
declines, albeit starting from lower starting points. A decline in technology transfer is consistent with the
increasing trend towards unilateralism in the CDM. These results suggest that the CDM has demonstrated its
ability to contribute significantly to technology transfer towards developing countries, in particular in the early
years of a host country’s involvement.

As more and more projects develop in a country, the need for technology transfer eventually falls as local
sources of knowledge and equipment become more established and awareness of the technologies available
grows. This shows the increasing maturity in host country’s use of the CDM – the scope for the further inflow
of technology is reduced and the need for technology diffusion within the country becomes more prominent.

SOURCES OF TECHNOLOGY TRANSFER

The countries from which the transferred technology originates are in line with the expectations in case of
technological development. 58% of the transferred technology originates in five countries – Germany, USA,
Japan, Denmark and China. 84% of the transferred technology originates in developed countries. The leading
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suppliers of technology among developing countries are China, India, Chinese Taipei, Brazil and Malaysia.
Germany is the main supplier of technology for Energy Efficiency (Households), Wind, N2O Destruction, and
HFC projects. The USA is the largest supplier of technology for Energy Distribution, Fugitive Gases, Fuel Switch,
Coal Mine/ Bed Methane, Energy Efficiency (Supply Side), Solar, Geothermal, Methane Avoidance, and Landfill
Gas projects.

Japan is the largest supplier of technology for Energy Efficiency (Own Generation), Energy Efficiency (Industry),
and HFC and PFC projects. Denmark is the largest supplier of technology to CO2 Capture and Biomass Energy
projects. China is the main supplier of technology for Hydro projects. Most developed countries tend to
receive CERs from projects for which they are technology suppliers.