1. Overview and Introduction to Technology Transfer Report Final TETRIS Workshop Brussels Dirk Forrister Natsource Europe Ltd 30 November 2006 Some new thinking from Natsource. More growth. Less pollution. Technology Transfer and Investment Risk in International Emissions Trading

2. Tech Transfer Study Objectives Learn how project-based emissions trading affects or facilitates technology transfer Examine and describe real technology transfers associated with GHG trading Determine scope for technology transfer in large potential CDM host countries, and from EU technology-exporting countries

3. Defining Technology Transfer Literature review: no single definition exists –UNFCCC –IPCC –CDM EB context –CTI, etc. TETRIS reviews 3 criteria: whether technologies deployed in CDM & JI… –originate from outside the host country? –are new or improved (i.e. less GHG-intensive) and do not represent business as usual in the host country of the project? –Involve capacity building and knowledge from outside the host country is required (installation, operation, and maintenance)?

4. Context $17 trillion is needed on energy infrastructure globally by 2030 (IEA) An estimated 1-3 billion CERs are needed during the 2008-12 period (World Bank) –1 billion CERs = roughly $8 billion, but leverage at 1:6 – 1:8 range –$8 billion in CER revenue leverages $48 – 64 billion in project investments –For comparison, total FDI + ODA is est. $50 – 60 billion / year –Yet prior efforts like GEF paled in comparison: $1.8 billion for climate change projects leveraging $8 billion Market data indicates new trends from CER/ERU trades …

5. Data on Technology % of CDM Volumes in Pipeline UNEP Riso database (May 3, 2006), CDM projects in pipeline (projects using methodologies that have been approved by the CDM EB) Includes 744 projects, 978 Mt by 2012 Largest categories: HFCs (40%; avg size = 30 Mt)), N 2 O (12%; avg = 23 Mt)), LFG (12%), biomass energy (7%), industrial energy efficiency (6%) Wind and hydro at 5% each, fossil fuel switch at 1%, solar at 0%

6. Data on Technology % of CDM Projects in Pipeline Largest categories: biomass energy (23%), hydro (17%), wind (13%), industrial energy efficiency (12%), agriculture (10%), landfill gas (8%) Small categories include HFC (2%), N 2 O (3%), solar (1%)

7. Data on Technology % of JI Volume in Pipeline UNEP Riso database (May 3, 2006), JI projects for which PDDs are available for public comment on the websites of DOEs Includes 110 projects, 64 Mt by 2012 Largest categories: fossil fuel switch (19%), energy distribution (15%), N 2 0 (14%), biomass energy (9%), hydro (8%), fugitive (8%), industrial energy efficiency (5%) HFC at <1%, solar at <1%

8. Data on Technology % of JI Projects in Pipeline Largest categories: hydro (21%), wind (14%), LFG (13%), biomass energy (11%), fossil fuel switch (9%), industrial energy efficiency (8%) HFC at <1%, N2O = 3%

9. Conclusions Technology transfer is occurring in the CDM & JI projects market –Compared to past technology flows, a significant new driver is evident from emissions markets –This trend will grow more significant over time – it is a potentially revolutionary trend, depending on the strength of the future market Thus far, GHG emissions markets alone may not stimulate the magnitude of technology transfer needed for transforming the international energy infrastructure Other governmental policies could add further impetus for technology transfer –AID programs –Financial mechanisms to address risks

10. JI: CH4, N2O Future of Market Interactions 2005-072008-12Beyond 2012 EUETS CO2 only, Power mainly EU ETS: CO2 only, Power mainly CDM: Any gas, any sector Full Global Trading: Large Sources of CO2, CH4, N2O HFC, PFC, SF6 All Major Emitting Countries Norway Canada Japan Norway UK NE States? California?

11. Some new thinking from Natsource. More growth. Less pollution. www.natsource.com Tel + 44 (0) 20 8439 9515 dforrister@natsource.com