The Clean Development Mechanism and the international diffusion of technologies: An empirical study

Abstract

SummaryThe Clean Development Mechanism (CDM) is expected to stimulate the North-South transfer of climate-friendly technologies. This paper provides an assessment of the technology transfers that take place through the CDM using a unique data set of 644 registered projects. It provides a detailed description of the transfers (frequency, type, by sector, by host country, etc.). It also includes an econometric analysis of their drivers. We show that transfer likeliness increases with the size of the projects. The transfer probability is 50% higher in projects implemented in a subsidiary of Annex 1 companies while the presence of an official credit buyer has a lower -albeit positiveimpact. The analysis also yields interesting results on how technological capabilities of the host country influence technology diffusion in the CDM.

Factors driving international technology transfer: empirical insights from a CDM project survey

“…While it is not one of its explicit goals, the CDM is frequently perceived as a vehicle for inter-2 International technology transfer in CDM projects national technology transfer 1 (Dechezleprêtre, Glachant, & Ménière, 2008Murphy, Kirkman, Seres, & Haites, 2013;Popp, 2011;Schneider, Holzer, & Hoffmann, 2008;Weitzel, Liu, & Vaona, 2014). As part of the CDM approval process, host countries may require these projects to involve technology transfer (UNFCCC, 2010), but only few countries have done so explicitly (SpaldingFecher et al, 2012).…”

“…Dechezleprêtre et al, 2008Dechezleprêtre et al, , 2009Haites et al, 2006;Haščič & Johnstone, 2011;Schmid, 2012;Weitzel et al, 2014). These factors typically include project size, the technology sector, the length of a host country's experience with the CDM and its technological capabilities.…”

“…Murphy et al (2013, p. 7) conclude that the least amount of technology transfer takes place in CDM projects involving "widely available, mature technologies". Dechezleprêtre et al (2008) argue that CDM projects in the energy sector and chemicals industry contribute more to technology transfer than projects in agriculture, because the former involve more complex technologies than the latter.…”

“…2 This finding may be explained by the need to protect valuable technological knowledge from imitation by local competitors. Only Dechezleprêtre et al (2008; 2009) explore the relevance of a host country's openness to foreign knowledge stocks in the context of the CDM. They find trade openness (measured by the sum of exports and imports of merchandise relative to GDP) to increase transfer probability, but the share of FDI in GDP was not positively related to technology transfer.…”

“…For example, Dechezleprêtre et al (2008), Haites et al (2006), Schmid (2012, and Seres et al (2009) find that larger projects are more likely to involve technology transfer. Dechezleprêtre et al (2008) explain this with the fact that technology transfer costs are fixed and thus represent an impediment to smaller projects. Most studies also control for the type of technology or sectors.…”