Alternative Energy/Paper

The Political Economy of Intellectual Property in the Emerging Alternative Energy Market

Introduction

The alternative energy field represents a unique case for studying the trends regarding the political economy of intellectual property (IP) in an emerging market. Some of the technology can be considered mature; however many are the barriers - technical, political or related to funding - that justify a young market in many countries. These issues are at the center of our research under the Industrial Cooperation Project at the Berkman Center for Internet and Society at Harvard University (ICP). This research is part of a broader project being led by Prof. Yochai Benkler. Within the ICP, we are seeking to understand the approaches to innovation in the alternative energy sector looking specifically at wind, solar and tidal/wave technologies. The intention is to map the degree to which open and commons-based practices are being used compared to proprietary approaches.

In this sense, our research is guided by the definition of the “commons” molded by Yochai Benkler, who asserts: commons are a particular type of institutional arrangement for governing the use and disposition of resources. Their salient characteristic, which defines them in contradistinction to property, is that no single person has exclusive control over the use and disposition of any particular resource. Instead, resources governed by commons may be used or disposed of by anyone among some (more or less well defined) number of persons, under rules that may range from ‘anything goes’ to quite crisply articulated formal rules that are effectively enforced. Commons can be divided into four types based on two parameters: The first parameter is whether they are open to anyone or only to a defined group. The second parameter is whether a commons system is regulated or unregulated. Practically all well studied limited common property regimes are regulated by more or less elaborate rules - some formal, some social-conventional - governing the use of the resources. Open commons, on the other hand, vary widely. (Bankler, Yochai. 2003. The Political Economy of Commons, The European Journal for the Informatics Professional, Vol IV, no 3) (BENKLER, 2003, 6)

We began our research with the intention of limiting our scope to the US only, but given the global scope of the alternative energy market, and the fact that almost all the market leading companies have grown in foreign countries where the markets for this technology have been biggest, we chose to include Germany, Denmark, Spain, and China in our long-term research. The European countries represent three of the biggest markets for wind and solar technology, and are home to some of the biggest companies producing the technology. China is the newest and biggest market entrant into the solar market, and could become the biggest producer of this technology over the next few years.

We also decided to spicy the research by inserting it within the context of the international debate around Climate Change, specifically in relation to the links of these debates with the development of technology and innovation policies focused on alternative energy.

Thus, our goal is to follow the alternative energy market and identify the levels of openness and closedness in the areas where innovations are happening, dialoguing with a bibliography that covers the political economy of intellectual property and how intellectual property impacts innovation. We will also be looking for the presence of commons-based arrangements of knowledge production within the alternative energy innovation process to determine if they appear, and if so, where and how they appear.

We chose these three technologies with the expectation that we would find variations among their approaches to openness and closedness, since the technologies represent different levels of maturity and patenting activity. The maturity can be measured both by the stage of development of the technology and the stage of development of the market. For instance, wind is considered a mature technology because it is fairly well understood, and the cost of generating electricity with wind turbines is closer to the cost of conventional sources of fossil fuel generated electricity (see Figure 10) - though it is still more expensive. Solar photovoltaic (PV) technology is less mature and can be quite expensive, therefore the research and innovation around solar PV technologies is sure to play a critical role in bringing its costs down and generating more efficient technology . Tidal/wave technology is relatively immature compared to wind and solar, and is mostly in the demonstration phase at this time. Only a few small projects around the world - such as a tidal barrage, which was constructed at La Rance in Brittany, France in the 1960s (citation to Bryden 2004, 139) - are generating consumer electricity.

These technologies are a subset of the many alternative energy technologies that exist, and they are all representative of energy supply technologies, meaning they are focused on bringing energy to a point of final use. There is another set of technologies called energy end-use technologies that are part of our discussions of the cleantech industry as a whole. These technologies are concerned with the most efficient use of the supplied energy. Examples are home appliances, automobiles, and light bulbs.

Within our three focus technologies - wind, solar and tidal/wave - there are a variety of subset technologies. Figure 1 provides a description of the technologies our research is focused on. These technologies are only used for electricity supply. Technologies we are not researching are solar thermal - which uses the suns energy to heat water for home and commercial use -, solar heating and cooling - which uses building design to take advantage of the sun’s direct heat and energy to efficiently heat and cool buildings at different times of the day and during different seasons -, and any wind or tidal/wave technologies - which use the energy from the source for mechanical work, rather than for conversion to electricity. We excluded these technologies because they are less common than the electricity supply technologies we are researching, and because electric supply technologies can have a bigger impact on reducing global carbon emissions by reducing the use of coal for electricity generation. Reducing the use of coal can facilitate the shift to a lower emissions electric plug-in vehicle market thereby reducing the world’s dependence on both coal and oil the biggest global climate change contributers - as shown in Figure 2.
Figure 1
Technologies for electrical generation from solar, wind and tidal/wave energy
Figure2
Global Anthropogenic GHG emissions divided by type of gas

The Focus of this Paper

In this paper, we aim to discuss the role that Intellectual Property plays in the cleantech market, specifically in its alternative energy subset, and the emerging debates around protections and knowledge governance for these technologies. We hope to achieve this goal, by mapping the innovation process of our chosen technologies and identifying the main players within the field - including governments, universities and companies. We will try to understand their influence and the role they have played in shaping this debate over time. We will devote special focus to the upcoming United Nations Framework Convention on Climate Change (UNFCCC) Copenhagen Summit, which takes place in December, due to the recent delegate debates around compulsory licensing for critical climate change mitigation technologies.

Alternative Energy Technology History

While the origins of these energy supply technologies are all based in the 1800's, the practice of using the wind, sun, and tides/waves as sources of energy for work, are much older. Wind was used to power sailboats up to 5,500 years ago, and there is evidence of windmills for mechanical work in India 2,500 years ago. (Sorenson, 1991, 8) Solar energy is the basis of most energy on earth, including the energy in plants from photosynthesis, solar thermal heating, the fossil remains of organic material in oil and coal, and wind which is created when air, heated by the sun, rises and cold air from another area moves into that space. (Carlin, year, 348) Using moving water for power can be traced back to 250 BC. (Cite??)

a. Wind technologies

Wind turbines for electrical generation were first developed simultaneously in the US and Scotland around 1887. Charles Brush, and American inventor who developed an electric arc light system, needed electricity to test his lights in his home laboratory so he built a 60 foot wind turbine with an electric generator in it and wired it to a number of batteries for energy storage. This set-up successfully powered his laboratory for 15 years. While Brush is credited with the first electrical wind turbine, during the same period in the late 1800s and early 1900s a Danish inventor named Poul La Cour was inventing commercial scale turbines. By 1906 there were 40 windmills generating electricity in Denmark, which marked the beginning of the country’s relationship, and innovation edge, in wind technology. (Pasqueletti, year, pg)

Soon afterward, both Germany and the UK started to experiment with wind electricity and install their own turbines. Meanwhile in the US, some small companies were marketing small turbines for electrical generation on rural farms, but the development and adoption of the technology did not match Europe. By the 1930’s the US had a burgeoning market for small rural off-grid wind turbines, but that changed in 1936. The Rural Electrification Act was passed that year, which was tasked with connecting rural areas to the electrical grid. It was so successful that every US electric wind turbine manufacturer had closed its doors by 1957. In Denmark during this same period, wind power was spreading throughout the rural areas providing off-grid electricity. (Pasqueletti, year, pg)

In 1950, a Danish engineer named Johannes Juul began testing a prototype wind turbine for a Danish utility. The design used some technological elements from the earlier designs of F.L. Smidth, the founder of a successful Danish wind turbine manufacturing company, which had integrated aerodynamics into La Cour’s designs. Juul ultimately built a three-bladed wind turbine that was installed at Gedser, Denmark in 1956. It was in regular service from 1959 - 1967, and became the model for the wind turbines manufactured in Denmark in the late 1970’s after the oil crisis. A wind rush began in California in the 1980s, which was also in part due to reactions to the oil crisis, and Denmark was poised to dominate the market in the US. Denmark shipped thousands of wind turbines to California between 1980 and 1985, and after the market in California crashed, Denmark started selling thousands more to Germany. All of these turbines were technologically derived from Juul’s turbine. (Pasqueletti, year,pg)

In the US during the 1970s, NASA funded research at the Lewis Research Center in Cleveland, Ohio, to refine the design and function of electrical wind turbines. Soon after the oil crisis, the US government started to fund the Federal Wind Energy Program, and research and development (R&D) funds were devoted to the cause. Research was also conducted at Sandia National Laboratories in California. In the 1980’s the government drastically reduced their R&D funding for wind and other alternative energy technologies (for reason that are explained later in this paper) and shifted the focus of alternative energy developments over to tax credits. (DODGE, year, pg)

b. Solar photovoltaic (PV) technology

The solar photovoltaic (PV) effect was discovered in 1839 by Alexandre-Edmond Becquerel. He observed that when selenium was exposed to sun a small electrical current was created. Solar PV panels remained undeveloped until 1953 when the first commercial panels were manufactured at Bell Laboratories after one of the lab’s scientists discovered that silicon could be used in place of selenium as a more efficient material for creating electricity. The US government took a keen interest in the technology for use in the space program, and funded PV developments for that purpose. (Cite Sorenson and Perlin) Throughout the 1960s solar research was funded by governments and in research labs, mostly for applications in the space industry for satellites and space-based vehicles. When the oil crisis of the 1970s occurred the US government founded the Solar Energies Research Institute - later renamed the National Renewable Energy Laboratory (NREL) - to develop new, lower cost solar energy technologies. US President Jimmy Carter further supported the R&D efforts of the solar industry by allocating $3 billion for solar energy research, and installing a test solar water heater in the White House as well as a solar PV array on the roof. (Is there any information on the IP policy in force by then? Or all the results were patented? If patented do we have numbers or examples?) These developments came to a halt in the 1980’s when President Ronald Reagan took office and drastically cut the R&D funding for solar energy, while also removing the solar PV array from the roof of the White House (are there any pictures of this panel in the roof?).

The US represented 80% of the global solar energy market at the time, and soon, the other industrialized countries followed the United States’ lead (source? All these type of specific data needs source). Throughout the 1980’s and 1990’s solar research was limited to research universities, inventors and state energy agencies, and the assets and patents of the original solar energy technology companies were purchased by large oil companies like Mobil, Shell, and BP. (Cite Bradford 2006, 98)

A research conducted at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government (footnote with link) could identify the source of funding of 14 from 20 key innovations in PV technology developed over the past three decades (1970s, 1980s, 1990s). It was discovered that only one of the fourteen was fully funded by the private sector, and nine of the remaining thirteen were financed with public funding, while the other three were developed in public-private partnerships. The researchers assumed that the innovations for which they could not identify funding sources were developed in the private sector. (Cite Norbeg-Bohm 2000, 134)

Over the last twenty years, the market for solar technology has grown in foreign countries while still moving slowly in the US, other countries - especially Japan and Germany - have taken the lead in technology development and installation of solar technology. Solar is still a very immature and expensive technology with a small but growing global market share. Countries such as Spain and Germany have used generous renewable energy subsidy programs - referred to in this paper as demand-pull policies - to rapidly install massive amounts of solar PV technology. Figure 3 shows a comparison of the countries with the top production share and the countries with the most installed PV capacity.

(And China?)
Figure 3
Comparison of Solar PV production market share by country and total installed capacity by country

The researchers at the Harvard Belfer Center came to the following conclusions on solar PV innovation in the US:

In sum, the strengths of the U.S. Solar R&D program have been: (1) a parallel path strategy, (2) collaborations between industry, universities, and national labs including public-private partnerships with cost sharing, (3) attention to the full range of RD&D needed, from basic scientific work through to manufacturing, including attention to all components, materials, cells, and modules. Critiques of the solar PV R&D program include: (1) a lack of consistency in funding that created fits and starts in technological progress, and (2) concern that manufacturing R&D was not begun soon enough. Overall, the trend has been to increase attention to manufacturing issues and to increase public-private partnerships, including growth in the level of private sector cost sharing. (Norberg-Bohm, 2000, 135)

c. Concentrating Solar Power (CSP) Technology

Solar PV’s lesser know and less common relative is Concentrating Solar Power (CSP). Solar thermal furnaces that generated sufficient heat to produce steam - the basis of a Concentrating Solar Power (CSP) plant - were first developed in the eighteenth century and used in small scale applications in the US and France during the 1860’s. Today, the US is seeing renewed interest in CSP plants, while the current supply of CSP generated electricity comes from a number of 80MW (megawatt) plants in Southern California, which were built in the late 1980’s.

Nevada, a state with very strong renewable energy support policies (what type? Maybe something in a footnote), initiated the first long term power purchase agreement of concentrating solar electricity signed between two public utility companies and the US solar developer Solargenix (which is now owned by a Spanish solar company named Acciona). The developer built the second largest CSP plant in the world with 75 MWe trough plant that was completed in 2007. It uses 760 parabolic troughs and has over 300,000 m2 mirrors and storage of less than one hour to guarantee the capacity. (PHILIBERT, 2004, 14; WIKI SOLAR ONE, 2009)

In June 2004, the Governors of New Mexico, Arizona, Nevada, California, Utah, Texas and Colorado voted a resolution calling for the development of 30 GW of clean energy in the West by 2015. Of this alternative energy development, 1 GW would be of solar concentrating power technologies. The US Department of Energy decided to back this plan and to contribute to its financing in June of 2004. (PHILIBERT, 2004, 14).

Cite (LUZZI & LOVEGROVE, 2004, 669) CSP is a mature and very well understood technology with growing adoption in the US. (any information on patents?)

d. Tidal/wave technologies

Tidal and wave technology are a subgroup of Ocean Technologies . There are many different established tidal and wave technology designs in use or in various phases of testing. Tidal energy generators are mainly divided into two categories: underwater turbines and hydrokinetic generators. Underwater turbines are simply freestanding turbines/propellors that can be grounded to the bottom of the ocean or the bottom of a tidal inlet. Hydrokinetic generators are more similar to existing hydroelectric power generation systems that are used in rivers throughout the world. However, rather than using a dam system or tidal barrage, which would create a structural barrier across a tidal inlet, hydrokinetic generators can be freestanding like the underwater turbines, and thereby are proven to have far fewer deleterious environmental impacts on marine ecosystems. (Perez, 2009, 2) The first bona-fide tidal energy plant was constructed in France, at La Rance in Brittany between 1961 and 1967. It consisted of a barrage across a tidal estuary that utilized the rise and fall in sea level induced by the tides to generate electricity from hydro turbines. (BRYDEN, year, pg)

Wave power generators can be divided into four main technologies: Point absorbers, attenuators, terminator devices and overtopping devices. It is estimated that in the United States, wave power generators have the potential to produce up to 2,100 Terawatt-hours of power, which is equivalent to almost 20% of the power consumed in the country. The most ideal conditions for wave power plants are in the Pacific Northwest. To date several international and domestic companies have filed applications with the Federal Energy Regulation Commission (FERC) for test projects off the coasts of California, Oregon and Washington. (PEREZ, 2009, 3)

Internationally, wave power generators have received strong government support in Europe and Australia. Portugal is home to one of the first grid-connected, wave-power conversion farms, which began operation in September 2008. The technology used is an attenuator generator, which resembles linked sausages that float on top of the water and generate electricity by harnessing the power in the oscillation of the waves. (Cite Perez 2009, 3)The same technology is being considered for test sites in Scotland, Hawaii, Oregon, California and Maine. A company called Energetech has been testing a full-scale, 500kW terminator device, which is “an oscillating water column (OWC) used in onshore or near-shore structures,” at Port Kembla, Australia and is developing another OWC project for Rhode Island. (Cite Perez 2009, 4) In Wales, an overtopping device called the Wave Dragon is being tested for full-scale deployment. The overtopping device works by channeling waves into a reservoir structure that sits higher than the surrounding ocean; the water in the resevoir is released through turbines that generate electricity. (Cite Perez 2009, 5)

The market for ocean technologies started to grow in 2004 and maintained healthy growth though 2007 when the total investment in the technologies including both public and private sources, was $76 million. In 2008 the investments dropped by $26 million. (Cite Perez 2009, 7) Figure 4 shows the evolution of investment in the technology from 2004 onward. The future promise of tidal/wave technology is great both in terms of total amounts of energy that can be generated, and the predicted cost-competitiveness of the technologies.

Figure 4
Total public and private investment in ocean technologies ($ millions)

A Rapidly Growing Market

According to the United Nations Environment Programme (UNEP) and New Energy Finance, the cleantech industry grew to over $155 billion in 2008, up almost forty-eight percent from 2006, worldwide. (SEFIa 2009) Figure 9 shows the gradual growth by financial quarter over the past few years. Its importance is not only environmental, but also geopolitical. The technologies that form alternative energy - and companies that explore them - vary immensely in type, innovation cycles, maturity and techno-economic readiness.

Figure 5
New global investments in clean technologies by year

In terms of constituencies, the presence and influence of actors vary among countries, imprinting different forms to the organization of alternative energy innovation For instance, in Japan, the government has traditionally taken a strong role in coordinating such activities through its Ministry of Economy, Trade, and Industry; while European countries have stressed and exemplified cross-country collaboration and coordination. In the US, the private sector exercises greater autonomy, even after the emphasis on public-private partnerships since the 1990s. In developing countries, such as Brazil, the government typically takes a very strong role in funding and coordinating innovation in energy, as in the biomass efforts of Petrobras. The various entities collaborate in a range of combinations, within countries and internationally, and impacts the availability of funding for R&D. For instance, the private sector accounts for the majority of expenditures for energy R&D in International Energy Agency (IEA) member countries, although governments account for a large fraction as well. (Cite Gallagher, et. al. 2006, ?)

The global market for clean energy technologies relies on government support, which helps these technologies attain cost competitiveness with fossil fuel energy generation. Currently, as shown in Figure 8, the cost of generating electricity with alternative energy technologies is higher than with coal, which provides 50% of the electricity generated in the US and 80% of the electricity in China. (Cite Schell 2009) Government support policies that subsidize the cost of deploying alternative energy technologies are referred to as demand-pull policies. The market leading companies, have generally developed in the areas of the world with the most generous demand-pull policies, and, predictably, under governments that have prioritized the growth of alternative energy technologies. The majority of the biggest and most successful wind and solar technology companies in the world are located outside of the US, with wind manufacturers being disproportionately grouped in Germany, Spain and Denmark, and solar companies being more widely distributed between Germany, Japan, China and the US. What distinguished these other countries from the US are their government's alternative energy policies. In Germany, Spain and Denmark a demand-pull policy called a Feed-in Tariff (FiT) has been responsible for the rapid growth of their alternative energy technology markets, and has thus encouraged the development of many of the leading technology companies. (Cite Rickerson & Grace 2007) China, on the other hand, has taken advantage of the growing market for solar energy technologies, and has funded significant R&D to create cheap and efficient solar photovoltaic cells that are being sold in foreign markets, most notably the US and Europe. Only recently has China added its own FiT for wind and solar to help encourage their home market (Cite Gipe(a) 2009). Like most FiTs, China’s includes a “buy local” provision, which gives better financial incentives to those who install clean technology produced by Chinese companies. (Cite Martinot 2008)

Figure 6
The costs for generating one kilowatt hour with various types of electricity generation technology

CAROL IS WORKING IN A SEPARATE DOCUMENT ON PATENTS AND MESUREMENTS OF INNOVATION IN AE

The Market in the United States

The market for alternative energy technologies in the United States has grown due to a myriad of indirect and direct factors. Indirectly, global climate change concerns and volatile fossil fuel prices, along with US energy security concerns tied to its dependence on unstable foreign sources of oil, have pushed alternative energy into a strategic position of importance. Direct factors affecting the growth of the market have been a recent increase in private VC funding for alternative energy technologies, and a growing public-sector opinion that supporting these technologies is in the best interest of the country. In 2008, $19.3 billion of venture capital and private equity funds were invested in renewable energy and energy efficiency firms, an increase of 43% compared with 2007. (Cite SEFI 2009, 28) Up to this point, the US has lagged behind other countries, mainly those in Europe, in terms of its technology deployment funding (demand-pull policies). This has been due to complicated political and economic factors that have not plagued European nations to the same degree, which allowed policies that encourage the adoption of renewable energy to flourish. In terms of its public research and development (R&D) and demonstration funding (supply-push policies), the US reduced its investment in the 1980s - like many other developed countries - and has only recently begun to increase the funding for alternative energy and cleantech developments. (Gallagher et al. 2006)

The current market growth comes after a long lull that followed the original US push toward energy independence and alternative energy technologies in the 1970’s. The 1973 oil embargo caused the US and Europe to prioritize alternative energy investment and development, providing a buffer from the volatility of supply and demand for oil. The supply-push and demand-pull policies targeting alternative energy technologies, which were initiated during this period, defined the market leaders (Germany and Denmark) and those left behind (the US). Ultimately, the US was able to take a haphazard approach to alternative energy policies due to its prodigious stores of coal, oil and natural gas and political leadership that favored these industries. Now, spurred in part by the increasing momentum of the cleantech movement, alternative energy producers, consumers, and various regulatory and advocacy bodies are each responding to and evolving with the field, and thereby creating new market demands and offerings. While these trends are complicated in their economics, politics, and other social factors/barriers, the gradual consolidation of the field’s largest producers is already perceptible in the wind market, for instance. Figure 11 shows the distribution of the wind market by market share.

Figure 7
Top wind turbine manufacturers by market share

As noted in Figure 10, wind energy technology is the most cost competitive of the available alternative energy technologies, and has thus far been the most successfully and widely adopted technology in both the US and abroad. (Cite REN21 2009) In 2008, the US passed Germany as the global leader in total wind energy capacity at 25,170 GW. (Cite REN21 2009)

While the US is making a late entry into the global clean energy market, it has had a successful start in terms of technology deployment as evidenced by their installations of wind turbines. The US has fallen behind in technology development though, and is left in a position of being dependent on foreign nations for technology licenses. So far the Obama Administration and the Secretary of Energy, Steven Chu - a Nobel Prize winning physicist and renewable energy advocate - have made favorable progress toward regaining the countries lead in energy technology innovation. President Obama said: “Our investments have declined as a share of our national income, (and) as a result, other countries are now beginning to pull ahead in the pursuit of this generation’s great discoveries.” (Cite Belsie 2009) In response the President has pledged to increase government R&D funding for new technologies, including alternative energy technologies, to over 3% of GDP, a higher percentage than the US reached at the peak of the Space Race in 1964. (Belsie 2009)

A financial commitment of this level will be needed as the challenges of encouraging growth in the cleantech industry are unlike any of the US's previous technological challenges. No single clean technology will be sufficient to replace conventional carbon emitting energy sources as professors Pacala and Socolow of Princeton University have famously shown in their study of stabilization wedges, which demonstrate how each of the existing clean technologies must be used to reach the entire mitigation goals that the Intergovernmental Panel on Climate Change (IPCC) deems necessary within the next 50 years. They explain that no single technology can be scaled up to meet the GHG mitigation goals of stabilizing and eventually reducing GHG emissions, rather, the entire portfolio of currently available technologies must be used and scaled up over the years if we are to reach the mitigation goals while also allowing global economies to grow. (Cite Pacala & Socolow 2004) Clean technologies will require cost-effective development to succeed. Direct competition with the powerful coal, natural gas and oil industries and their lobbyists will make balancing government funding difficult because the government is simultaneously and extensively subsidizing both fossil fuels and clean technologies.

Alternative Energy Policies in the United States

The United States has a deeply politicized energy policy history. While the environmental wing of American politics, now tied to the political left, has urged subsidies to renewable energy - specifically to sun and wind - for decades, they neglected support for geothermal energy. The political right has meanwhile been just as enthusiastic in its support of subsidies to oil, natural gas, and nuclear energy. The coal and oil industries have been protected by the congressional delegations in key states where they provide employment. Due to these pressures, and a long regulatory history, the role of the government in the energy sector has been intense and interventionist. Even with the growing geopolitical and climate change realities, neither political party has attempted a balanced, technology-neutral approach to energy policy. Even today this legislative policy debate is missing in the U.S. Congress; each energy technology, both alternative and incumbent, seeks its own separate legislative deal for federal backing. (Weiss and Bonvillian 2009) This leads to the government picking technology winners, which is a policy destined for failure in the new energy future where a wide array of new technologies will be necessary to address the climate change issue.

In the US, the first favorable government subsidy policy for alternative energy was introduced in 1978 - The Public Utilities Regulatory Policy Act (PURPA) - which encouraged the installation of over 1400 MW of wind power capacity in California. (Cite PURPA 2007; Gipe 1995) Most of the turbines installed were built in Denmark by the leading manufacturer at that time, Vestas, which is still the top manufacturer today. Figure 12 below shows other US demand-pull policies used to encourage deployment of alternative energy and clean technologies. Supply-push policies fall under the R&D investments in the US, and will be explained in the next section.

Figure 8
Demand-Pull technology deployment policies in the United States

R&D Investment in the United States

As of 2007, federal support for energy R&D had fallen by more than half since a high point in 1978, and private-sector energy R&D has similarly fallen. (Cite Gallagher, et. al. 2006) Since 2007, with the renewed interest in clean technologies and most recently, the economic meltdown and subsequent American Recovery and Reinvestment Act (ARRA), which designated billions of dollars for energy R&D, the landscape has changed. Figure 13 shows the overall expenditures for US government energy research, development and deployment (RD&D). (Cite Anadon et. al. 2009)

Figure 9
US Department of Energy RD&D Spending 1978 - 2010 Request by expenditure type

While the ARRA funds have raised R&D and demonstration funding back to its 1979 level, the FY2010 request drops back down to previous levels which compare poorly to other major federal R&D efforts that met challenges of similar magnitude: the Manhattan Project, the Apollo Project, the Carter-Reagan defense buildup, and the doubling of the budget of the National Institutes of Health. Advances in energy technology will not occur on the scale required without significantly increased investment by both government and business, and in the years after 2009, the challenge will be to find that money in the government’s coffers.

a. Public R&D Funding

Most of these funds are being given to the 17 U.S. Department of Energy laboratories, which have historically been an ineffective model for cleantech technology development and commercialization. The main reason for this ineffectiveness is that most of the labs do weapons research, which is developed for one guarantied client - the U.S. Government - and is considered a high priority given the size of U.S. military forces and their active involvement in two wars. As a result the lab system knows how to develop products for the military, but as a whole, lacks the private sector business acumen to launch energy technologies from initial innovation through demonstration across the “valley of death” and into commercialization. (Cite Weiss & Bonvillian 2009) Figure 14 shows the historic investment in R&D for wind, solar and ocean technologies, and gives a clear indication that funding has stagnated since the 1970s allowing countries like Japan and China to make significant inroads in alternative energy and cleantech development.

Figure 10

The same graph, limited to data from 1985 to 2007, is displayed in Figure 15.

Figure 15

In Figure 16 the R&D spending on solar, wind and ocean energy technologies is displayed as a percentage of each country’s GDP. Given the overall size of the United States and Japan’s GDP’s it is not surprising that alternative energy technology is such a small percentage. Alternative energy technologies form a much larger percentage of Denmark, Germany and Spain’s GDP.

Figure 16

It is apparent that the investment level of the ARRA funds in 2009 will need to be sustained for more than a year to provide the type of funding that will be needed for this clean technology revolution. These graphs show that allowing the R&D funding to drop back to the levels it has been at for the past 25 years will result in the stagnant development we have seen over that period.

Another portion of public R&D funding goes to universities. The US Department of Energy funds 46 research centers through its Energy Frontier Research Centers (EFRCs), which are designed to address energy and science “grand challenges.” The 46 EFRCs are to be funded at $2 - $5 million a year for 5 years, and were chosen from over 260 applicant institutions. In total the program represents $777 million in DOE funding over five years, and 31 of the centers are led by Universities. In August, Secretary Chu announced the selection of the new EFRC centers and said:

Meeting the challenge to reduce our dependence on imported oil and curtail greenhouse gas emissions will require significant scientific advances. These centers will mobilize the enormous talents and skills of our nation’s scientific workforce in pursuit of the breakthroughs that are essential to expand the use of clean and renewable energy.

Figure 17 shows the 46 EFRC centers.

Figure 17

Each institution received funding for a particular center doing research on a particular type of clean technology, and in some cases more than one center at a particular institution was awarded funding, as is the case with the Massachusetts Institute of Technology (MIT), which receive EFRC funding for the Solid-State Solarthermal Energy Conversion Center, and American Reinvestment and Recovery Act of 2009 (ARRA) funding for the Center for Excitonics, which is also conducting research into solar PV technology. The EFRC represents an increased emphasis on the importance of university based research, and expands the R&D funding for this research.

b. Private R&D Funding

Based on a study conducted by the National Research Council in 2001, it has been estimated that between 1978 and 1999 almost two thirds of the total energy R&D expenditures in the United States were made by industry. (Comm. on Benefits of DOE 2001; Gallagher et al. 2006, p.216) Due to this research and the assessments of experts at the Kennedy School of Government at Harvard University, it is believed that the private sector provides a larger portion of the R&D funding for clean technologies. A more detailed assessment of this estimate is very difficult to accomplish due to the proprietary nature of the funding information within private companies. (Gallagher et al. 2006, p.216) The access to information is limited starting from early stage angel investing and continuing through mature venture capital contributions, though, as detailed in the numbers above, there are market reports that quantify the venture capital and private equity portions of private sector investment. (can we check how much cias are investing? For example X % to R&D…even if it is not clear what “R&D” they are doing? Maybe in the market reports? We should try to interview people ate cias urgently)

IP and Alternative Energy Technologies

As global climate change continues to dominate international negotiations around capping carbon emissions, as evidenced by the contentious discussions leading up to the UNFCCC Copenhagen Summit, the Intellectual Property rights of the technologies that will facilitate the carbon reductions have become a hotly debated topic in the last couple of years.

Patents represent the most significant IP tool involved in this field, and until recently, the IP factor did not parallel the usual IP debate found elsewhere in regards to access, sharing or balance. Many IP issues did not come to the center of attention of IP observers or even civil society groups focused on IP issues and development. This is because the debate over clean and renewable technologies has been politicized and linked to long-term discussions around climate change, but not linked to innovation and IP as in other fields like pharmaceuticals, software, and cultural works (Carol: insert footnote expanding this comparison?).

In this sense, political strategies from cleantech and alternative energy industry associations were much more focused on policies to foster the adoption of these technologies - the supply-push and demand-pull policies as explained in this paper - over fossil fuel-based energy. Thus, it appears that few in the international IP community have paid attention to the crescendo of patents in the alternative energy market as evidenced in Figure 4.

Stakeholders Intellectual Property Discourse

However, this lack of attention from the IP community changed dramatically in the spring and summer of 2009 with the advent of the Obama administration making public statements about sharing technology related to energy. (Revkin & Galbraith 2009) In late March during a speech at Brookhaven National Laboratory, Secretary Chu was asked by a reporter whether he thought there should be more international collaboration in some areas of energy research. Secretary Chu replied:

Since power plants are built in the home country, most of the investments are in the home country. You don’t build a power plant, put it in a boat and ship it overseas, similar to with buildings. So developing technologies for much more efficient buildings is something that can be shared in each country. If countries actively helped each other, they would also reap the home benefits of using less energy. So any area like that I think is where we should work very hard in a very collaborative way — by very collaborative I mean share all intellectual property as much as possible. And in my meetings with my counterparts in other countries, when we talk about this they say, yes, we really should do this. But there hasn’t been a coordinated effort. And so it’s like all countries becoming allies against this common foe, which is the energy problem.

These comments earned a quick response from the United States Chamber of Commerce, a leading lobby representing businesses, which expressed its concern that sharing the intellectual property of new alternative energy technologies with developing countries could erode the IP rights that have driven commercial efforts to innovate for generations. (Green Patent Blog 2009)

Additionally, late in May 2009, the Chamber of Commerce and representatives of General Electric, Microsoft and Sunrise Solar gathered in Washington to launch the Innovation, Development & Employment Alliance, or I.D.E.A. (Green Patent Blog 2009) The initiative is aimed at pressing Congress and the Obama administration to ensure that global climate-treaty talks do not weaken protections on who can profit from new technologies that provide abundant energy without abundant pollution (Cite Burgos 2009) The creation of I.D.E.A. has been widely noted, with some alarm, in the IP “watchers” community, and likely means the status of alternative energy as a less-observed IP sector is finished for good.

Private industry views the patents on these technologies as necessary to ensure a return on their R&D investment. Steve Fludder, the director of the green “Ecomagination” division of General Electric, which plans to invest $1.5 billion next year in research and development, expressed his concern over Secretary Chu’s comments about sharing IP. “Why would we invest $1.5 billion a year in innovation that just slips through (our) fingers? I mean, why would anybody invest in anything that they would have to just give away?” he added “Stifling investments in innovation is going to basically work against the very goal that everyone is trying to achieve.” (Cite Revkin & Galbraith 2009)

Many governments around the globe have identified the challenge of climate change as worthy of compulsory licenses for critical technologies, which is modeled on the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS allows compulsory licensing in critical cases related to issues of public health. (ICTSD 2008) The United Nations Framework Convention on Climate Change (UNFCCC) has been the host of these discussions as member nations are trying to design the Post-Kyoto regime, which will be voted on in December of 2009 in Copenhagen, Denmark. China, India and Brazil have, for example, been advocating for the compulsory license provision in order to provide technologies at a reduced price to developing nations. (Weisbrot 2009) The United States has been divided on the issue and has powerful entities working on both sides.

Technology Collaborations and the role of Intellectual Property

As noted above, Secretary Chu has publicly supported collaborating with developing countries - in particular China - and sharing all IP rights of the resulting technologies. (Cite Revkin & Galbraith) He has already pushed forward with a new U.S.-China Clean Energy Research Center, developed with $15 million dollars each from the U.S. and Chinese governments, and designed to create innovative technologies for building energy efficiency, clean coal (including carbon capture and storage) and clean vehicles. (Garthwaite 2009b) After meeting with the Chinese Science and Technology Minister Wan Gang in the Great Hall of the People in central Beijing, Secretary Chu said: "I know we can accomplish more by working together than by working alone." (Cite McDonald 2009)

In addition, Secretary Chu is advocating for the development of open-source building energy-efficiency software that will make it cheaper and easier for developers to implement energy saving measures in new buildings, both in the U.S. and in emerging economies like China and India. He said “We should be inventing a new way of designing buildings — just like we engineered airplanes.” He offered an example of software that helps design integrated passive shading into a building, which is similar to other non open-source software applications that are able to pinpoint design elements like the most efficient window orientation for a particular building site, that takes advantage of the sun’s heat to maximize a building’s energy performance. (Garthwaite 2009a) While other open-source energy efficiency software projects have been undertaken in the past, their success has been limited by insufficient development funding. (Cite Garthwaite 2009a)

In reaction to these new developments, I.D.E.A.’s first official act was to back the Larsen-Kirk Amendment (H.Amdt. 187) to the Foreign Relations Authorization Act (H.R. 2410). The amendment calls on the President, the Secretary of State and the Permanent Representative of the United States to the United Nations to uphold the existing international legal requirements for IP rights and avoid any weakening of them for the UNFCCC in the context of energy and environmental technology. The Amendment passed the House with a 432-0 vote. It was described as an amendment to protect U.S. green jobs and U.S. technology innovation. (Larsen & Kirk 2009)

Compulsory Licensing

Since the model for compulsory licensing has been borrowed from the biotech/pharma industry, the broader discussion among IP scholars has been whether the biotech industry is a good model for the IP challenges faced in the cleantech industry and whether compulsory licensing will encourage technology transfer to developing countries (Cite Barton 2007). Since the compulsory license addition to TRIPS was designed to provide developing nations with the ability to produce generic versions of patented drugs that are critical to public health, the comparison to the cleantech industry is appropriate since these technologies can also be critical to the future health of many countries that stand to be negatively affected by climate change. In practical terms, the two industries differ in many ways. While the biotech/pharma industry deals with high R&D and clinical trial costs to develop a cheaply duplicated product (often a drug) that usually has limited competition in the marketplace, the cleantech industry faces numerous more complicated factors. While the cleantech industry also has high R&D and demonstration costs, its products are typically very expensive to reproduce given their size and the amount of materials required to build them (take a wind turbine for example). Cleantech products are sold on a market that is full of other cleantech competitors, as well as competitors from the traditional fossil fuel energy markets, and, in the case of alternative energy technology, the strictly economic market for the least-cost technology based on price per kilowatt hour (kWh) - the demand-pull policies mentioned earlier can change the metrics of this economic market, which is one of the reasons it is so complicated.

The differences between the cleantech industry and biotech/pharma industry are substantial, and point to reasons why a system of compulsory licensing like the TRIPS model may not be effective for clean technologies. It is alluded to above that there are many different cleantech products, and this is yet another reason why the cleantech industry does not resemble the biotech/pharma industry. The cleantech industry includes alternative energy technologies such as the following - biomass & biofuels, geothermal, hydrogen fuel cells, ocean energy (wave, tidal, and ocean thermal), solar PV, CSP, and wind (onshore and offshore). Some energy industry members argue that nuclear technologies and high efficiency/low-carbon combined-cycle natural gas turbines can also be considered alternative energy. In the larger cleantech industry, technologies cover energy efficiency, carbon capture and storage, and the automobile industry. Technologies include - hybrid vehicle technology, advanced batteries, solar thermal technologies, energy efficient home appliances, lighting, and industrial machines, building energy efficiency software & hardware, electrical transmission & distribution software and hardware, and myriad energy storage technologies. It goes without saying that the different areas of scientific research involved with these technologies covers the full spectrum from biology to chemistry, engineering, nanotechnology, materials science, optics, etc. The only industry that can come close to matching the complexity of cleantech is the automobile industry, and it is still much more consolidated in its scientific spectrum.

Within the literature that addresses the issues related to IP in the cleantech industry, there are a number of conflicting views and a clear opinion that, overall, there has not been enough study of the IP factor in this nascent industry. The following is a review of the pertinent reports and their findings. (find the country compulsory licensing position papers from the UN)

Evidence from the Literature (be sure to integrate into the arguments below the proof from the literature review above, rather than having a bibliographic lit. review.)

The existing literature on the IP landscape in clean technology and the debates around the use of compulsory licensing make two points clear. First, there is a need for more research into the effects of IP in the nascent cleantech industry. None of the existing technology innovation models match the complexity of the industry, which involves myriad technologies (as noted earlier) and competitive markets. Second, the literature points to a preliminary finding that IP does not create a barrier to technology transfer - in the case of clean technology as a whole - from developed to developing countries. The weaknesses in these findings are the lack of detailed empirical evidence assembled from the various technologies that comprise the cleantech industry.

In a paper by Prof. John Barton of Stanford Law School (Barton 2007), he argued that the patent and industry license practices are both warranted and crucial to technology innovation. The report focuses on the role of IP in alternative energy technology transfer for solar, wind and bio-mass technologies to China, India and Brazil. He asserts that competition between clean technologies and the competition in the electricity, fuel, automobile, and housing efficiency markets, reduce the ability of companies to charge a premium for their technology leaving manufacturing and capital cost as the greatest costs for clean technologies. Using the wind-turbine manufacturer Vestas as an example, he points out that R&D is only a small portion of overall cost of their turbines, resulting in a mark-up of only 0.20 on the manufacturing cost. This leads to low royalties - on the order of 1% of the sales price for the turbines. Therefore, there is very little wiggle room for differential pricing between the developed world and the developing world, which - he argues - means that compulsory licensing is unlikely to be an effective way to disseminate the clean technologies in developing countries since there will be very little financial benefit. He goes on to discuss the different issues observed in each of his three focus technologies.

• The wind market tends to be quite consolidated with the four top companies controlling 75% of the market. IP issues are not expected to be a big issue here due to the easy access to the technology, though there may be future issues with cartel behavior. Developing countries like China and India have been successful in gaining a foothold in the wind market by buying developed nation firms and acquiring their patents.

• The PV industry suffers from a difficult market existence due to the high cost of the technology. The market is somewhat consolidated, though there are numerous companies that manufacture various parts of the PV installation, which breeds a high level of competition. Thin film technologies may create a bigger IP barrier for developing nations due to the advanced nature of the technology, and the developed nation control over these technologies at the current time.

• The biomass industry does not currently suffer from any IP barriers, but the promise of cellulosic ethanol, could create a battle over patents for the enzymes that will break down the lignin for sugar. The biggest barrier in this sector will probably be trade tariffs like the US tariff on Brazilian ethanol.

Barton notes that in all three technology sectors developing nations firm’s have succeeded in entering industry leadership and in some cases patents may have aided technology transfer. Patent disputes have usually been resolved by cross-licenses or product modifications in a pattern common in non-monopoly industries.

In a later paper, Barton (Barton 2008a) takes a closer look at the economic and policy challenges of meeting the emissions reduction targets of the UNFCCC through technology development and dissemination in developed and developing countries. He focuses on renewable electricity sources, carbon capture & storage and other mitigation technologies, biofuels, industrial efficiency, consumer conservation, and nuclear energy; he outlines the emissions reduction potentials, the modes of encouragement for the technologies, and the special issues in international technology transfer, making three points about the process that will be undertaken to disseminate these technologies. First, the financial heart of technology diffusion will be physical investment in the form of subsidies or regulatory incentives. Second, public-sector support for R&D is important. Third, his examples imply that the costs specifically assignable to technology will be very small when compared with the overall capital and investment costs.

There is general agreement within the literature that innovation in cleantech will only happen with appropriate and consistent carbon pricing systems to create a stable market for new technologies. In particular, a report from Chatham House (Reichman et. al. 2008), an independent research organization in the UK, asserts that these market incentives will create an atmosphere where innovation can happen and R&D funds will flow into the clean energy technology industry. The authors believe that the nascent stage of clean energy technology development leaves very little empirical evidence to support the argument that IPR does or does not create barriers. Their report focuses on bio-fuels, solar PV, hybrid cars, fuel-cells and wind energy. Among their observations, the authors report that:

• Bio-fuels do not seem to have a patent barrier. Small firms working on the enzymes for cellulosic ethanol are collaborating with larger firms and the patents seem to be generating a market for small firms. In the PV sector the authors refer back to Barton’s report (Barton 2007) and note that interchangeable patented technologies that work in the PV modules create a fairly competitive market and reduce any barriers.

• Hybrid cars, fuel cells and the wind industry all represent incremental innovation, which is to say that the basic technology is off-patent and well known, while new improvements are being patented - but not exclusively - by certain market entities. This means there is competition among the manufacturers of these patented improvements.

• There is a possible copyright IPR barrier that could develop around microbial agent research for ethanol enzymes, which is protected under EU Database Law.

The report suggests alternatives to traditional patenting and licensing in order to encourage innovation in green technologies.

• Technology pools (patent pools) - licensing the combination of patents that make up a particular technology in an affordable pool of patents. The Eco-Patent Commons does this in a royalty free manner, but is not currently offering any alternative energy technology patents. This could be the basis of a Global Fund that buys up patent pools for critical carbon-abatement technologies and offers them to developing countries.

• Prizes - rather than offering grants for R&D research, prizes can be offered for the most innovative solution to a particular problem.

The most current and controversial debates taking place around IP and technology transfer have been connected to the UNFCCC Copenhagen Summit, where developing nations such as China, India and Brazil hope to convince developed nations such as the US and the EU, to include a compulsory licensing option in the next version of the Kyoto Protocol climate change treaty. This model is borrowed from the biotech/pharma industry where governments are allowed to mandate that a company license patents for drugs that are critical to public health, at low or no cost, to generic drug companies in developing nations. The US government and the US Chamber of Commerce, in particular, have been quite unhappy with the idea of loosening IP protections for developing nations and have been vociferous in their objections.

A group of US companies who are concerned about the weakening of IP protections at the Copenhagen Summit have joined forces with the US Chamber of Commerce and created the Innovation, Development and Deployment Alliance (IDEA) asserting that “robust IP protection is needed to encourage investment in clean tech research and development, create green jobs and find solutions to the world’s energy and environmental challenges.” (Green Patent Blog 2009) Members of IDEA include large companies with strong patent portfolios like GE and Microsoft. An article by Josie Garthwaite of Earth2Tech explored the development of IDEA. In interviews for the article a venture capitalist and a lawyer opined that compulsory licenses are unlikely to have any affect on the deployment of critical carbon-mitigation technologies in developing countries due to the comparatively larger economic and infrastructure barriers in these countries. They believe that these issues will trump the assumed patent barrier issue.

In a direct challenge to the US Secretary of Energy, Steven Chu, David Hirschmann, the President & CEO of the Global Intellectual Property Center, asserted his belief of the importance of keeping IPR strong rather than loosening the rights as Secretary Chu had suggested in his speech at Brookhaven National Lab. (Revkin & Galbraith 2009; Hirschmann 2009) In an article he wrote for the Intellectual Property Watch blog, he notes that loosening IP protections could result in lost jobs and points out that this would be counterproductive to President Obama’s mission to create green collar jobs. (Hirschmann 2009)

In a 2008 paper by the International Centre for Trade and Sustainable Development (ICTSD), the authors suggested that compulsory licensing could provide the necessary framework for effective tech transfer to developing countries, while also suggesting other options such as financial mechanisms like a “Multilateral Technology Acquisition Fund,” which would buy IP rights for transfer to developing countries; prizes as incentives for alternative energy technology innovation; and institutional arrangements for open or collaborative innovation similar to the USA-China collaboration recently finalized by the Secretary Chu. (ICTSD 2008) In a partial contradiction, Frederick Abbott, a professor at Florida State University Law School, wrote about the Copenhagen Summit IP debates in a report for the ICTSD in June of 2009 (Abbott 2009). He agrees with the general consensus in the literature that there is insufficient information available on the effect of IPR on clean technology innovation and transfer. His report uses the biotech/pharma industry as a comparison model for the cleantech industry, drawing his assessment of future success in the cleantech industry from the current progress of the biotech industry. He asserts that compulsory licensing has influenced the biotech/phharma industry on the margin, but the structure and behavior in the industry have remained largely constant. He notes that research has shown that the industry has consolidated rather than expanded due to compulsory licensing, and more companies (not less) are located in OECD countries. This evidence leads to his conclusion that compulsory licensing will have a similar impact in the cleantech industry. Abbott suggests that a solution to the tech transfer issues faced by the cleantech industry is patent pooling, which could encourage technology sharing at the R&D and commercialization stages.

In similar support of the use of patent pools, Kevin Closson wrote in the IP Strategist in 2009 (Closson 2009), that the wait time for patent approval is currently too long, and that inventors in the US should use the “petition to make special,” which covers sustainable technologies, and can reduce the time to approval. Making a case for patent pools instead of patent thickets, he argued that while these are not a panacea, they will allow more effective access to the technology since sustainability technologies tend to involve a large number of different technologies combined with many of them being out of patent protection and in the public domain.

Copenhagen Economics and The IPR Company, two independent research companies, were contracted to assemble a report on the role of IPR in technology transfer in the lead-up to the Copenhagen Summit, and tried to assert a definitive conclusion on this complicated issue. The report presented data showing that patent protection in emerging markets has been on the rise. They noted that in 1998, 1 in 20 patents were protected in developing countries, while, by 2008, the number was 1 in 5. Within those developing countries, 99.4% of the patents were in a small group of emerging markets (China, India, Brazil, etc.). The authors determined - based on this trend - that patents are not a barrier to tech transfer to the majority of these developing countries since there are hardly any alternative energy patents registered in these countries. The authors also found that within emerging economies, the country with the largest number of wind technology patents only accounted for about 40% of all wind patents protected in emerging economies and the second, third and fourth largest patent holding countries accounted for only 30% of all wind technology patents protected in emerging economies. This indicates that there is a great deal of competition among wind technology manufacturers in emerging economies, which means that the price mark-up due to a patent monopoly cannot be very high. The authors argue that if wind technology is too expensive for developing nations to buy, it is not due to the IPR protections, but rather, more likely due to the additional cost of alternative energy technologies as compared to conventional fossil-fuel based energy technologies, which are often subsidized to create artificially low prices. They conclude that emerging markets could benefit from greater IP protection regimes since they have the market size and technological capacity to innovate locally, and foreign patent holders would be more willing to transfer technology if they knew their patents were protected. The authors suggest that transferring technology to developing countries could consist of financial support to compensate low-income developing countries for the economic burden of carbon abatement while preserving the countries’ incentive to minimize the costs of that abatement.

Mark Weisbrot of the Guardian Newspaper in the UK, offered his support for compulsory licensing in a short article in May of 2009. (Wesibrot 2009) He discusses the World Trade Organization rules that led to compulsory licensing in the biotech/pharma industry, comparing the mandate to the proposed model in the cleantech industry. The author views the WTO rules as protectionist and supporting a fundamentalist view of IPR, and he asserts that the cost of WTO trade restrictions has been $220bn a year when compared to liberalized trade. The article states that the Doha Declaration is one of the few victories to NGO’s fighting for a loosening of the WTO trade restrictions that keep crucial medicines from the populations in developing nations. Based on this historical background, Weisbrot asserts that compulsory licensing would be a positive policy in the cleantech industry.

So while the literature provides a helpful background on the issue, the relative scarcity of academic articles on this topic and the general assessment among the researchers that more research is necessary, leave an opportunity for others to step in and try to complete a more comprehensive study of the field.

China’s Market Share

The available literature also emphasizes the trend of increasing patents in emerging economies like China, India and Brazil. China in particular, is a rapidly growing market player, which is presenting significant competition to the U.S. in the cleantech market. The New York Times reported recently that China’s solar PV industry is growing rapidly led by Suntech Power Holdings Ltd., the leading producer of PV panels in China and fourth largest global producer. (Bradsher 2009; Capello 2008) Currently, China is backing their solar industry with significant subsidies, which are enabling Suntech to sell their panels on the American market for less than the cost of the materials, assembly and shipping. (Bradsher 2009) While the Obama administration plans to give $2.3 billion in tax credits to cleantech manufacturers in the U.S., it may be too late. China is able to produce the technology at a much lower cost in large part due to the cheap labor they can hire, paying recent engineering graduates around $7000 a year. In addition to Suntech there are a number of Chinese companies ready to enter the solar market backed by the governments deep pockets. (Bradsher 2009) However China still faces trade restricions…but this can change if they achieve the plan of building assembly plants in the US.

The emerging competitive threat presented by China may provide some insight into Secretary Chu’s push for US/China energy technology collaboration. While a vast number of developing countries will contribute to carbon emissions (graph of the top carbon emitters), China is now the largest global carbon emitter. It also has an enormous brain trust devoted to the cleantech field. It will benefit the US to create collaborative partnerships with China to encourage their adoption of these technologies, and to ensure that the US doesn’t fall behind in the development of new innovative technologies.

There is no panacea to the climate change issue, and a broad spectrum of technologies must be used to address carbon emissions reductions. The particular technologies that are appropriate for certain countries are specific to the needs of that country based on their overall emissions, their pace of growth, their natural resources, and their alternative energy resources (sun, wind, tides, rivers, etc.), among other factors. It can reasonably be argued that for the least developed countries that produce far less carbon emissions than developing countries or the emerging economies like China, India and Brazil, the most economically efficient way to meet their carbon emissions reduction targets would be through non-IPR protected means such as re-forestation or reduced de-forestation plans. (Copenhagen Economics & The IPR Company 2009)

More from here: http://www.energy.gov/news2009/7642.htm

The Sino - American Energy Geopolitical Relationship

The US and China have a tenuous political relationship and their current battle over the appropriate policies and technological innovations for climate change action has added new complexity. While the US has been a long-term leader in global carbon emissions, China doubled their energy consumption from 2000 to 2007, and surpassed the US claiming the top global carbon emitter mantle at 24% of global emissions. These two countries are now responsible for roughly half of the world’s yearly carbon emissions. The culprit is coal, which provides 80% and 50% of China and the US’s energy respectively. It is the cheapest fuel available - cheaper that oil, natural gas, or any of the commercially available renewable energy sources - and the US has 27% of global coal reserves while China has 13%. As the countries discuss their role in climate change mitigation and the carbon reductions they will agree to, China has held a firm stance that the reductions and policies must be led by the US. This is based on the fact that the US per capita carbon emissions are five times greater than China’s and, when calculating the total carbon emissions since the beginning of the industrial revolution, the US is responsible for 28% while China can claim only 8.5%. (Schell 2009)

At this point in our research we have not identified any commons-based models of technology development. What we have found are free renewable energy resource maps that provide measures of potential energy in particular regions on the country. The maps with this information are provided freely by the government through the National Renewable Energy Laboratory (NREL) website and consist of wind, solar, geothermal and biomass resource maps. These maps are of the entire US and typically will provide detail down to 1km x 1km squares that rank the level of sun insolation in that area, the speed and consistency of wind in that area, the presence of biomass materials for harvest, or the existence of geothermal heat wells. This information is critical to developers or individuals who want to assess the viability of installing alternative energy technology in a particular location. The government believes that by providing this information for free it is encouraging the development of new alternative energy plants.

Internationally, IRENA - a multi-national organization whose membership includes more than 79 countries pledging to facilitate the global growth of renewable energy through the sharing of all relevant information including renewable energy resource measures, best practices, effective financial mechanisms, and state-of-the-art technological expertise - still does not show a clear position in relation to the dispute around sharing of IP. But it is clear in its goal in facilitating sharing of information and technology transfer. (IRENA 2009)