green technology

Whither Technology Transfer? The rise of China and India in Green Technology
Sectors
Authors:
Rasmus Lema
Researcher, Institute of Development Studies, United Kingdom (corresponding author)
([e-mail])
Adrian Lema
Advisor, Danish Ministry for Climate and Energy, Denmark
([e-mail])
WORK IN PROGRESS,
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Abstract
Technology transfer is a key element in the climate change regime and the negotiation process within the United Nations Framework Convention on Climate Change (UNFCCC). But given the substantial progress made in China and India with regard to building innovation capabilities and green industries, how relevant is the UNFCCC model of technology transfer for these countries? How much mileage is left in (the concept of) technology transfer? In order to examine this, the paper seeks insights from three green technology sectors in both countries: wind power, solar energy and electric and hybrid vehicles. We examine developments at sector level and at the micro-level, focusing on key national champions in each sector. We find that conventional technology transfer mechanisms such as trade, foreign direct investments and licensing were important for industry formation and take-off. However, as these sectors are catching up, a range of other mechanisms have become increasingly important, including endogenous technology creation, global R&D networks and acquisitions of firms in the West. We argue that there is limited practical and analytical mileage left in the conventional UNFCCC approach to technology transfer in these sectors in China and India. Our findings challenge the low carbon technology transfer debate that unfolds in the context of the international climate change policy. We emphasise the need for context-specific mechanisms supporting local innovation and global technology collaboration.

Keywords
Climate change; low carbon innovation; rising powers; technological capabilities; technology transfer; UNFCCC.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Danish Ministry for Climate and Energy or the Institute of Development
Studies.

1. Introduction
There is increasing agreement that a global shift in economic power is under way: from the West to the East. This is apparent in trade flow data which show that the ‘Rising Powers’ of Asia, China and
(to a lesser extent) India, now account for a substantial amount of the production of the world’s goods and services.1 However, the build-up of capabilities in China and India is not only occurring in the sphere of production, but also in the sphere of innovation and technological development
(Altenburg et al. 2008).
While commentators and the scholarly literature is still trying to catch up with the changing global distribution of innovation capabilities (Altenburg 2008; Ely and Scoones 2009), climate change – or rather the increasing awareness of climate change – is emerging on the top of the economic and political agenda. It is thus increasingly accepted that economic growth needs to be based on new technological paradigms that can decouple this growth from greenhouse gas emissions. Climate change is driving public and private sector stakeholders to seek solutions for a low carbon future.
The transfer of ‘green technology’ from developed to developing countries is widely considered to be a key ingredient in any global solution to the mitigation of greenhouse gas (GHG) emissions. It is formally supported by the United Nations Framework Convention on Climate Change (UNFCC) and in the climate change negotiations technology transfer and development is demanded by China and
India who seek access to environmentally sound technology in exchange for mitigation actions.
In this paper we seek to connect the mounting shift from production (knowledge-using capabilities) to innovation capabilities (knowledge-creating capabilities) in China and India with the debate over the global transfer of green technology. If China and India are making the transition from users to producers of technology, what does that mean for the technology transfer debate? How relevant is the UNFCCC model of technology transfer? These are the key questions addressed in this paper. In order to discuss these questions we take three main steps: (i) we explain what technology transfer is and how it is understood in the UNFCCC policy context, (ii) we examine how important it has been in building technological capacity in key green technology sectors in China and India and (iii) we discuss the implications for negotiations within the UNFCCC, for policy and for the framing of questions for further research.
The paper is structured as follows. Section 2 of the paper provides the key definitions and the conceptual framework. It defines what technology transfer is and it makes a distinction between
‘conventional’ and ‘unconventional’ technology transfer mechanism. It then goes on to show how both the UNFCCC model and the related discourse are predominantly focused on (policies for) conventional mechanisms of technology transfer, such as international trade, patent licensing and inward foreign direct investments . However, we hypothesise that in China and India such mechanisms are now insufficient on their own. A range of other channels should be taken into account in the effort to understand the development of technologies and technological capabilities in the context of international technology transfer. These include ‘unconventional mechanism’ such
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It has led some scholars to suggest that the major changes in the world economy are now driven by the economic growth and substantial accumulation of production capabilities in these rapidly emerging economies. For this reason, China and India are sometimes referred to as the ‘Asian Drivers’ of global change
(Kaplinsky and Messner 2008).

as global R&D collaboration and outward foreign direct investments. Furthermore, we suggest localised innovation and learning needs to be taken into account if we want to understand the process of technology transfer and technological catch up in green technology sectors in China and
India. Understanding whether these countries are catching up is important because technological innovation capabilities in key low carbon sectors is likely to be a basic prerequisite for a shift to low carbon growth in these giant economies.
In order to answer the key questions raised in this paper, it is necessary to step back and examine: (i) whether and to what extent the ‘breakthrough’ in the transition from production and innovation has occurred in low carbon technology and (ii) the extent and nature of technology transfer in this process. We review the insights from three key ‘low carbon’ sectors with high mitigation potential: the wind turbine sector, photovoltaic (PV) solar energy and electric and hybrid vehicles. The purpose of section 3 is to examine the emergence and development of the sectors and review the technological progress made. The discussion of sectoral developments is combined with a study of
‘national champions’ in each sector, based on company sources and secondary literature. The study of technological development provides the groundwork for examining the role of different technology transfer mechanisms. The findings regarding technology transfer mechanisms are distilled in section 4. It seeks to assess relative importance of conventional and unconventional technology transfer and endogenous technology creation. This analysis is focused on the micro-level, that is, the role of technology transfer as a source of capability for the national green technology champions in China and India. As an element of this, the section also discusses the overall role of dedicated technology transfer policies and institutions under the UNFCCC.
Collectively section 3 and 4 show that when it comes to key green technology sectors in China and
India – two very important countries in the climate change equation – the existing UNFCCC model of technology transfer is increasingly being superseded by reality. There are two main reasons for this.
First, the technological gap is now small and decreasing in these key low carbon sectors. In all three sectors examined in this paper, albeit to varying degrees, India and China have strong firms that in recent years have emerged as serious competitors to established market leaders in the West.
Second, when technology transfer occurs, it is no longer conventional transfer which is most important. The implications of the findings are identified and discussed in section 5 and 6. Our findings raise significant policy questions with relevance to the international climate change regime discussion of technology transfer and its key policy stakeholders. Section 5 starts by identifying the key implications for technology transfer policy in the context of the UNFCCC. As the global climate change regime moves ahead, there will be substantial opportunities for investments related to climate change mitigation and adaptation in poor and middle income countries and support of low carbon innovations. The challenge is to identify the most appropriate incentive mechanisms and policies. We argue that there is a need to shift the emphasis from transfer of mitigation technology to creation and collaboration – and that there is scope for polices to support the latter under the
UNFCCC. However, we also emphasise that in the real world it is difficult to come to an agreement about polices because of the conflicting interests and perspectives. Technology transfer is situated in the intersection between global public goods and national economic interests. It is necessary to unpack this complex problem area and we provide a way of doing this by identifying the key

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stakeholders and the implications of our study for unlocking the debate as it pertains to China and
India in key low carbon sectors.
Rather than providing definite conclusions, the aim of the paper is to raise policy question and to set an agenda for further research. Our case studies are useful as they generate fresh perspectives and questions but our empirical findings need to be interpreted carefully because our insights are informed by selected case studies that are based mainly on company and secondary sources. There are ample opportunities for further primary research into this field. Section 6 therefore ends the paper by first reflecting on the key question of how much mileage there is left in the technology transfer concept and then it identifies the key questions that such further research should address.

2. Conceptual framework
Technology transfer is an increasingly important element in the discussion over a global collective response to climate change and in the UNFCCC process where it is seen as a key part of the global solution for reducing GHG emissions. The global environmental discourse posits that technology transfer can enhance the efficiency of mitigation at a global level because of the gap in technologies and technological capabilities between developed and developing countries. This is typically maintained because it is assumed that “most technologies are still mainly developed and first deployed in the industrialised world” (see also IPCC 2007; Schneider et al. 2008: 2931). Before examining the validty of this assumtpion in the chosen sectors of China and India, this section discusses what technology transfer is and it provides the key analytical concepts which will aid our subsequent analysis.

Defining technology transfer
Technology transfer has been defined as ‘a broad set of processes covering the flows of know-how, experience and equipment’ (IPCC 2000: 3). In general, such flows can be formed between producers and users of technology – or from one use to another – for the purpose of economic gain (Schnepp et al. 1990). However, in this paper we are concerned with the potential flows of technology that may be involved in the mitigation of climate change (Ockwell et al. 2008; Stamm et al. 2009).2
Furthermore we are concerned with the potential flows that travel across global-scale geographical distance and the divide between OECD countries and the so-called developing world (China and
India) and we focus on the private sector because it ‘is the main source for the worldwide diffusion of technology’ (Schneider et al. 2008: 2930; see also Stern 2007). Because firms are the key actors in technology development, diffusion and transfer, a micro-level focus is important, but the understanding of individual firms needs to be situated in the sectoral context, including the sectoral policies and institutions.
According to Bell (1990), the process of technology transfer occurs between technology suppliers and technology importers (recipients). He too emphasises that technology transfer is typically a firm centred process rooted in the supplier firms’ engineering, managerial and other technological capabilities. Technology is transferred through three types of flows or categories of transferable technology: (i) flows of capital goods, engineering services equipment designs, (ii) flows of skills and know-how for operation and maintenance and (iii) flows of knowledge, experience and expertise for
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At the earth Summit – which gave birth to UNFCCC – it was established that developed countries should take all ‘practical steps’ to promote technology transfer in clean technology to developing countries.

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generating and managing technological change. The first two flows results in new and increased production capacity of technology importing firms or countries but they add little or nothing to their technological capacity. The third flow is almost purely embodied in people and the expertise is concerned with changing developing or introducing new technology. These flows are thus associated with two broad types of capacity: production capacity and technological innovation capacity.
In this paper we are particularly concerned with technological innovation capacity and the role of technology transfer in the development of such capacity. Like Altenburg et al. (2008) we are concerned with whether and particularly how China and India are progressing from production to innovation, albeit with our particular focus on low carbon technology sectors. Flows of knowledge, experience and expertise for generating and managing technological change (Flow iii) is likely to be most relevant in this regard, and while low carbon technology transfer is difficult in general (Ockwell et al. 2009), this type of flow is particularly challenging for several reasons. One reason is that technology producers have an obvious interest in the transfer of equipment (export), but at the same time they may be reluctant or unwilling to share the underlying capabilities because these capabilities are core competences that are central to their own competiveness (Mallett et al. 2009).
Another reason is that even if such transfer is accepted through compensation, technological knowledge is inherently difficult to move across space. There is widespread agreement that much knowledge is tacit and built up in a cumulative and path dependent way: it is sticky and not easily transferable (Madsen et al. 2008; Malmberg and Maskell 2006; Schmitz and Strambach 2009). For this reason, the accumulation of technological innovation capability depends on indigenous efforts and investment in knowledge creation. To the degree that this knowledge creation involves absorption from the outside, it requires close and prolonged interaction. This is discussed further below. Conventional and unconventional flows and mechanisms
So far we have discussed technology transfer in terms of flows between developed and developing countries. However, for the purpose of this paper it is necessary to examine the sources of such flows and the mechanisms involved. In seeking to examine such mechanisms it is important to distinguish between several different forms these may take.
In this paper we distinguish between ‘conventional’ and ‘unconventional’ technology transfer. This requires explanation. Our starting point is the early literature in which there was a strong distinction between innovation and technology transfer (diffusion). It was assumed that economic and technological catch-up would be rapid: once technology was developed in advanced countries, it would flow freely without significant interaction between technology producer and importer and without substantial investment in absorption and related capability building in importing firms or organisations. This notion stemmed from the neoclassical economics perspective. This perspective equates technology with ’hardware’, such as equipment and designs (Flow i), and it assumes that new technology, once created, can be used immediately by all actors (see Byrne 2010). However, a range of studies in the technology and innovation literature has now shown the limitations of this assumption (Bell 2009; Kulkarni 2003; Ockwell et al. 2009; Shamsavari 2007). The literature shows that technology transfer can occur in different ways and that it involves varying degrees of internal effort and investment in so-called ‘recipient’ firms and countries. It can occur with varying degrees of interaction across geographical and cultural distance between suppliers and importers of

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technology. These factors – (i) the degree of interaction and (ii) the degree of internal effort and investment – are key variables.
The typical case of conventional technology transfer requires limited interaction and internal efforts of related capability building are relatively low. As observed by Stamm et al. (2009: 19), ‘There are a number of technological artefacts for the transition towards more sustainable development patterns, and these are available “off the shelf” and at continuously declining costs due to international competition’. Seen from the developing country perspective, imports of capital equipment is thus the classical example of such transfer. Licensing of technology (intellectual property rights) and joint ventures in developing countries based on foreign technology are other examples of such conventional technology transfer. These mechanisms involve mainly a one-way flow of knowledge and technology.
Unconventional transfer mechanisms have higher interactive requirements between firms and people in developed and developing countries and they depend on substantial investments by the latter. For instance, acquisition of foreign technology owners can be costly and significant interaction is required to absorb knowledge embodied in people and organisational routines. Other examples include the establishment of R&D departments overseas, global joint ventures and collaborative
R&D projects with other organisations, within the home country or overseas.
Unconventional mechanisms are typically highlighted as new sources of innovation and learning in studies of the emergence of national champion firms and sectors (industry and services) in China and
India (Altenburg et al. 2008; Lema 2010; Zeng and Williamson 2007). These are mechanisms that allow developing country organisations to tap into global pools of knowledge for innovation and they often involve outward knowledge seeking FDI. This refers to the acquisition of foreign firms, the establishment of global R&D networks at the firm-level, the formation of collaborative R&D projects for new technology development and the formation of linkages with innovative lead users of technology. Recent research (Schmitz and Strambach 2009) has observed an increasing 'organisational decomposition of the innovation process ' (ODIP). Innovation that tended to be centralised at or near headquarters is now much more decentralised within the company.
Furthermore, innovation activities that used to be carried out in-house by innovating firms themselves are now carried out by and with independent suppliers or collaborators. The innovation process has thus become increasingly decomposed with a broad spectrum of sources and mechanisms involved, not only in OECD countries but also in emerging economies (Lema et al.
2009).
It is important to emphasise that these are not absolute categories. There is a continuum between conventional and unconventional mechanisms and these categories need to be understood in a two dimensional space as shown in Figure 1. Furthermore the question is how important technology transfer is in relation to and in combination with other mechanisms. Bell (1990) and many other have emphasised that low carbon innovation capability is likely to depend on indigenous investment in training, R&D, reverse engineering etc. In the words of Ockwell et al. (2009), ‘innovation capabilities need to be fostered by a combination of localised innovation and international technology transfer’. In this paper we refer mainly to two types of mechanisms for such localised innovation, local in-house R&D and local technology linkages such as collaborative R&D or cooperation with research institutes.
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Figure 1: Indicative examples of conventional technology transfer mechanisms and unconventional technology transfer mechanisms

Higher degree of cross-border interaction

• Foreign acquisition • Overseas R&D
(in-house)
• Global joint venture
(overseas)

• Overseas collaborative R&D
• Joint R&D project with MNC

• Local joint venture with MNC
• Technology licensing
• Foreign Direct Investments
Lower degree of cross-border interaction

•International trade (capital import)

Lower degree of internal effort and investment in capability

Higher degree of
Internal efforts and investment

Note: The figure is illustrative only. The exact ‘position’ and order of different mechanisms will depend on the nature of the particular projects and activities. All mechanisms – except FDI – are firm-level mechanisms
(micro) with potential relevance for national champion firms in developing countries. FDI can have direct relevance at the national/sectoral level and indirect relevance for national champions that trough joint ventures and R&D local collaboration.

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Table 1: Technology development mechanisms (transfer mechanisms and endogenous technology creation) Conventional transfer mechanisms

Trade (capital imports)
FDI
Local joint venture with MNC
Technology licensing

Unconventional transfer mechanisms

Joint R&D with MNC
Overseas R&D (in-house)
Global joint venture (overseas)
Foreign acquisition of firms

Endogenous technology creations

Local in-house R&D
Local technology linkages

Table 1 shows the key technology development mechanisms that will be discussed in this paper: (i) conventional transfer mechanisms, (ii) unconventional transfer mechanisms and (iii) endogenous technology creation.

An UNFCCC model of technology transfer?
One of the key tasks of this study is to consider the key role for technology innovation, diffusion and transfer in green technology sectors (Stern 2007; World Bank. 2010) and the interrelation between the international climate regime and low carbon technology transfer. To do this we refer to an
UNFCCC ‘model’ of technology transfer. With this term we refer to the existing decisions, frameworks and mechanisms (policies) of the Convention (UNFCCC 1992, 2002) as well as the
‘discourse’ in and around ongoing climate technology negotiations. These elements are elaborated below. With regard to policies there is both direct and indirect support for technology transfer.
In terms of direct support, the current technology framework of UNFCCC was decided upon at COP7 in Marrakesh and is based on five pillars: (i) technology needs assessments in developing countries,
(ii) climate technology information, (iii) enabling environments, (iv) capacity building and (v) mechanisms for technology transfer (UNFCCC 2002). This framework was a response to the
Convention (Article 4.5) itself which commits industrialized countries to facilitate the transfer of technologies and support the development of endogenous capacities and technologies of developing countries. The establishment of the framework included primarily encouragements for national governments to enhance technology transfer activities and included no dedicated mechanism to facilitate transfer or building technological capabilities. However, some new structures were created. One was TT:Clear, a web-based technology transfer information clearing house. Another was the Expert Group on Technology Transfer (EGTT) which was established under the heading of
‘mechanisms for technology transfer’ although its prime objective is to analyse and identify ways to facilitate technology transfer activities. A third was the availability of financial support by the Global
Environment Facility for technology needs assessments in developing countries and some capacity building (Bazilian et al. 2008). The common denominator for the activities of the technology framework of the UNFCCC is facilitation of information regarding climate change mitigation and adaptation technology rather than practical transfer mechanisms (Thorne 2008).

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While the framework has a limited scope, there are a number of UNFCCC incentive mechanisms with linkages to the technology transfer agenda which is a part of the UNFCCC model. These are polices that contain indirect support for technology transfer, but transfer is not the main objective. These include the Kyoto flexible mechanisms – emissions trading, Joint Implementation and Clean
Development Mechanism (CDM) – and the financial mechanism of UNFCCC, the Global Environment
Facility (GEF). The two important mechanisms for developing countries, CDM and GEF, both provide incentives for mitigation in developing countries. These are either market based, in terms of tradable certified emissions reduction credits (CDM), or non-market based, as provision grants and facilitation of bilateral co-finance (GEF). Both are aimed primarily at climate mitigation, but has elements of technology transfer in their mandates: the GEF in its operational strategy and the CDM in that
“project activities should lead to the transfer of environmentally safe and sound technology and know-how” (UNFCCC 2002). Both are in essence primarily approaches to mobilize ‘carbon finance’ for mitigation and may involve a variety of the aforementioned transfer mechanisms simultaneously.
But these are indirect results whereas diffusion and mitigation are direct results (Lema and Hansen
2010).
Besides the existing mechanisms and frameworks, the UNFCCC model also includes the negotiation process and the related discourse on technology transfer. Policy documents (e.g. UNFCCC 2009) and the related literature on low carbon technology transfer (IPCC 2000; Schneider et al. 2008). Diffusion of technology in developing countries is typically the key point of departure in these documents, not the mechanisms of transfer per se. Little attention is given to the firm-level in which developing country companies are seen as recipients of technological capabilities (Ockwell et al. 2010). The
UNFCCC discourse has so far been focused mainly on conventional mechanisms of private sector technology transfer. As stated by (Schneider et al. 2008): ‘The main channels of private sector technology transfer are trade, licensing, and *inward+ foreign direct investment (FDI)’. However, in the Convention and Kyoto Protocol there is also language on ‘endogenous technology’ and developing countries have been pressing for a dedicated technology transfer mechanism since negotiating the Convention. But to a large extent the UNFCCC model on technology reflects the early literature, mentioned above, which concentrated on diffusion through conventional mechanisms.
However, the proposition which underlies our research is that unconventional transfer is becoming more central due to capital accumulation in India and China and because these countries have become increasingly networked and have built up significant relational and interactive capabilities in the global economy.

3. Green technology sectors in China and India
The rise of production capacity and the rapid diffusion of low carbon technology in emerging economies have become increasingly acknowledged. In China and India, key green technology sectors include (i) the wind turbine sector, (ii) the solar PV energy sector and (iii) the alternative energy vehicle sector, especially electric and hybrid electric vehicles. This existing literature on technology transfer has not pulled together the insights that can be gained from studying different low carbon sectors. The purpose of this section is therefore twofold. First, it seeks to examine the emergence and development of the industries and review the current technological capacity of these sectors in each of the two countries. This is done in order to address the question of whether the technological gap between these Rising powers and OECD countries has diminished. Second, it
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seeks to initiate the review of technology transfer mechanism. This is done at the sectoral level and at the micro level. The micro level-analysis centres on three most important ‘national champions’ identified in each sector (except for wind power in India where only one champion has been identified) based on market size. 3

Wind power in China
The Chinese wind power experience began in the mid-1980s with import of turbines from Europe, primarily through bilateral aid projects. Industrial and energy policies were often contradictory in the first 15 years, on one hand encouraging turbine imports, while on the other trying to build two joint venture partnerships between foreign investors and appointed Chinese industrial companies.
However, Lema and Ruby (2006; 2007) describes a policy change in the early 2000s with increased policy coordination between energy, technology and industry polices in the wind sector, including mandatory use and purchase of wind energy by utility companies, regional feed-in tariffs, a local content requirement of 70% and significant technology subsidies for local companies’ licensing, R&D and demonstration expenditures. The past decade has been one of unprecedented growth of the
Chinese wind power market and its national industry. In 1999, China ranked 9th in the world of top wind markets jumping to the second largest in 2009, slightly ahead of Germany and after the United
States (BTM 2010). The market is set for a continued high-growth path, including six mega projects expected to reach a combined 100 GW in 2020 (Schwartz 2009).
As the market has grown, the Chinese industrial structure has changed. From being largely an import country with about 97% of wind turbines imported in the late 1990s, the share of turbines made domestically rose to nearly 100% by 2010 (CWEA 2010; Lema and Ruby 2006). There are three pillars of China’s newly established wind power manufacturing industry. First, in the mid 2000s, as a response to the high-growth market and mandatory local production by the local content requirements, almost all global wind power lead firms established production in China through FDI
(including Vestas, Gamesa, Suzlon and GE Energy) and a few joint ventures emerged as well.
Secondly, a great number of smaller companies have entered the business trough independent design of wind technology or through local technology transfer agreements with centres of excellence, such as Shenyang University of Technology. Thirdly, and most striking, a few Chinese companies have become some of the largest in the world (in terms of accumulated sales) in a very short period of time. In 2006, no Chinese companies were in the global top 10, while by 2009, three national champions became global top-10 players – Sinovel, Goldwind and Dongfang (BTM 2010).
Conventional technology transfer channels such as FDI, licensing and joint ventures have been critical to the rise of China as a leading wind power industry in the nascent phase. However, looking closer at the three leading companies also reveal that while these conventional channels were strong forces in the first years, unconventional transfer strategies and other mechanisms have become more important during the catch-up phase. Sinovel, Goldwind and Dongfang have all initiated production of wind technology through licensing arrangements from various German technology companies and have had considerable success in supplying turbines to the growing
Chinese market, partly as a result of favourable government policies. As the companies’ own capabilities have become stronger, the relationships to foreign licensors have in all three cases developed into more symmetrical, joint development efforts bringing their respective capabilities
3

Data on sectors and companies is based on company websites and documents unless otherwise cited.

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together with foreign partners. For example, Goldwind has developed a 1.5 MW turbine jointly with
Vensys, and Sinovel a 3 MW turbine jointly with Windtech. Moreover, all major Chinese wind turbine manufacturers have undertaken considerable in-house R&D with the support of government R&D grants (Tan 2010). For example, Goldwind began testing (in 2009) of an own designed 3 MW turbine and Sinovel is working on a state-of-the-art, 5 MW offshore turbine in it’s newly established
“National Offshore Wind Power Technology and Equipment R&D Center". In addition, Goldwind has achieved presence in Europe and a stronger R&D through foreign acquisitions by obtaining a majority share of its former partner, Vensys, in 2008 as well as sub suppliers in key electrical components. These experiences show that indigenous Chinese wind power capabilities are on the rise and that a shift from production towards technology innovation is underway.4
Chinas experience in wind power technology development has followed a route of technology transfer in many respects, including through substantial FDI and licensing by local companies.
However, several developments among the national champions diverge from a conventional technology transfer case. Unconventional transfers such as foreign acquisitions to gain control of more sophisticated technologies and overseas wind technology R&D are on the rise in order to exploit foreign human resources advantages. Moreover, the national industry has shifted from merely licensing technology to co-development of new technology with foreign partners. In sum, in the maturation of the industry from production towards innovation, unconventional technology transfer and other mechanisms such as in-house R&D played a more importance role.

Wind in India
With a slow take off in the 1980s, the Indian wind sector took speed in the mid-1990s when national and state policies began to focus on fiscal measures such as tax exemption. India’s Electricity Act
(2003) and many large states, including Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh, Madhya
Pradesh, Maharashtra and Gujarat have adopted renewable portfolio shares instructing electricity companies to purchase a certain share of wind in their generation portfolio, fiscal incentives or preferential feed-in tariffs for wind power (GWEC 2009; Khatana 2009). The Indian market has become the fifth largest in the world (BTM 2010).
In addition to these market policies, India have deliberately sought to develop a manufacturing industry, including through customs duty reduction for key components to encourage Indian manufacturing and assembly of wind turbine systems (GWEC 2009). From the mid-1990s the domestic manufacturing industry began rapid development through conventional and unconventional transfer of technology. Production facilities have been set up initially as joint ventures by companies such as Denmark’s Vestas and Germany’s Enercon and later a number of wholly owned subsidiaries have been established by other major players such as GE Energy, Gamesa and Siemens along with a number of smaller wind turbine and key component manufacturers
(Mizuno 2007).

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More time is needed to assess Chinese firms vis-à-vis the absolute technological frontier. Advanced technology levels are demonstrated in that Sinovel’s 3 MW offshore turbine has been developed and implemented and both Sinovel and Dongfang are working on 5 MW turbines. However, the Chinese export is very small and the quality of turbines has yet to be tested over the coming years.

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India is also a case of indigenous competences being developed and used to create a leading edge.
Kristinsson and Rao (2008) find that a substantial contributor to the development of the Indian wind energy industry were other mechanism than transfer such as a supportive innovation system and interactive learning with international and especially Danish companies and research institutions.
Engagement between Indian and foreign partners have resulted in learning and build-up of indigenous competences, and the role of national institutions, in turn, is critical to support the industry. For instance, a key role in ensuring the quality of the wind industry has been provided by the Centre for Wind Energy Technology (C-WET), an autonomous R&D institution under the Ministry of New and Renewable Energy. C-WET was established in 1998 in cooperation with the leading wind technology R&D and testing institution, Risø National Energy Laboratory of Denmark. Now one of three leading wind certification institutions globally (Kristinsson and Rao 2008), C-WET sets standards, performs R&D, testing and other services in cooperation with the industry. Although there is a gap between India and the world technological frontier, the innovation system performs an important supportive role (Mizuno 2007; Rajsekhar et al. 1999).5
The national Indian wind power industry has been growing over the last decade. While there are more than 30 Indian wind turbine manufacturers, the uncontested national wind power champion in
India is Suzlon. Suzlon has grown initially in the home market and had a 44% accumulated share of the Indian wind energy market by 2009 (C-WET 2009). However, striking is Suzlon’s strategy to have a global presence and tap human resources abroad, including substantial R&D in Germany, Belgium and The Netherlands, and blade manufacturing facilities in USA and The Netherlands as well as a turbine production facility in China. This experience began as a conventional technology transfer trajectory. Suzlon entered the wind power business in 1995 through a license agreement with
Germany’s Südwind to begin manufacturing turbines and in 2001 Suzlon integrated backwards in the supply chain to obtain technological capability in key components through licenses for rotor blades from Aerpac and Enron Wind. But Suzlon moved away from the conventional license strategy in the diversification process. Suzlon acquired AE-Rotor (in 2000), a blade manufacturer in The Netherlands and entered a joint venture agreement (in 2004) with Austrian company Elin to undertake joint R&D and production in India of wind turbine generators – the IPR of which are owned by Suzlon (Suzlon
2005). In 2006, Suzlon made a major move with its purchase of Hansen Transmissions, the second largest supplier of wind turbine gearboxes globally. Another major acquisition was of rival wind turbine manufacturer, REpower Systems, a specialist in R&D for large 3-6 MW turbines and offshore technology. The USD 1.8 billion acquisition has provided Suzlon with state-of-the-art technology and
R&D facilities in Germany as well as boosting its global market share to become the world’s fifth largest wind turbine manufacturer with a 9.1% market share (BTM 2010). In addition to conventional
(licensing) and unconventional (M&A, joint R&D and overseas in-house R&D) technology transfers,
Suzlon is also embarking heavily on indigenous technological capabilities through in-house R&D in
India. In sum, Suzlon has acquired technology through various means and is far beyond a case of simple technology transfer (Lewis 2007).

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The global wind technology leader, Vestas, is also cooperating with Indian research institutions, such as CWET and the Indian Institute of Technology. Vestas have established a full fledged regional research centre in
Chennai in 2007, tapping into the wind competences being build in the region. Initially, Vestas opened the facility as a R&D back office, but "upgraded" into one of Vestas ' five global R&D Centers of Excellence with 130 researchers employed in addition to over 600 Indian employees in manufacturing, management and maintenance (Lema and Schmitz 2010; Pedersen 2009).

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Solar PV in China
The Chinese solar photovoltaic industry has grown rapidly, with no more than 1% of global solar PV production in 2003 to become the world’s largest producer of solar PV cells in 2008. China’s PV cell production was 2.6 GW, ahead of Germany and Japan with 1.5 GW and 1.3 GW of cell production, respectively (Howell et al. 2010; Liu et al. 2009). With a 98% export share in the late 2000s, foreign markets rather than the national have been the key driver for Chinese companies. However, there are reasons to believe that the home market will become more important. China has a goal to increase domestic solar PV installations to 20 GW by 2020 and have announced the “Golden Sun” policy program to boost the home market by providing subsidies in the order of 50-70% of total solar
PV investment (Climate Group 2009; Howell et al. 2010).
The solar PV industry in China is primarily engaged in the polysilicon market although the more advanced thin film technology is picking up. The industry is engaged in R&D in China and has invested upstream in the value chain in silicon materials – a key component in the international mainstream technology, crystalline silicon solar cells – to avoid a scarcity of silicon (REN21 2009).
There are more than 500 PV enterprises and R&D units in China with technological levels in many companies on par with the technological frontier (Climate Group 2009) and eight companies rank among the top 20 PV-cell manufacturers worldwide ((REN21 2009). By end-2009, China had three solar PV national champions in the global top-10, Suntech (2nd), Yingli (5th) and Trina Solar (8th)
(Hirshman 2010).
The Chinese market leader, Suntech Power, occupied almost one fifth of the Chinese production capacity in 2008 (Howell et al. 2010). Suntech, as many other Chinese companies, have not followed a primary conventional technology transfer strategy. Suntech is engaged in licensing agreements with SolarWorld and Akeena Solar to use their technologies, but have had a strong focus on own inhouse R&D in combination with an acquisition of MSK Corporation in 2006, a PV module and
Building-Integrated PV company in Japan. Suntech has developed own key technology, holds a score of patents and have engaged in outward FDI to establish manufacturing plants in Germany, South
Korea and the US. Moreover, Suntech has also cooperated closely with research institutions in China
(Sun Yat-sen University and Shanghai University of Technology) and abroad (University of New South
Wales, Australia). Other top Chinese companies are also R&D intensive. Trina Solar have also both recently established a new ‘State key Laboratory’ under a support program by China 's Ministry of
Science and Technology. This PV R&D centre cooperates with key component suppliers as well as local universities and research institutions. Another national champion, Yingly have had a similar trajectory. Besides in-house R&D and local R&D cooperation through its own PV R&D centre, Yingli have also been engaged in acquisitions backwards in the supply chain. In early 2009, Yingli acquired solar polysilicon company Cyber Power Group and its subsidiary, Fine Silicon.
Foreign companies have also acknowledged that China is becoming a strong force in global solar
R&D. Not only are the major Chinese companies carrying out R&D in China, but major global players such as Applied Materials and DuPont have also established R&D facilities in China. Other companies have entered China through joint R&D projects or joint ventures such as BP Solar and Germany’s
Odersun. These foreign companies are not only tapping into local knowledge resources but also invests in knowledge production because local R&D is important in a developing country market which is different from the US or Europe.

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The experience of the Chinese solar PV industry does have both conventional and unconventional technology transfer features such as FDI and licensing, and joint ventures and M&A. But other mechanisms, both in the past and present, are more important. In-house R&D, cooperative R&D with local research institutions and domestic R&D by foreign companies are in the mix of the knowledge and technology creation which makes China among the world leaders of solar PV technology. Solar PV in India
With about 450 million people without access to electricity, large off-grid rural areas and frequent electricity black outs, India has not only a potential in grid-connected solar PV, but also for solar homes, water and irrigation pumping and street lighting in off-grid areas as well as for back up of public buildings such as hospitals (Bhattacharya and Jana 2009). India has had a national solar PV programme since the mid 1970s. In the first decades, the sector was mainly public, with state owned enterprises undertaking R&D and manufacturing of solar modules and other public organization purchasing solar systems. By the mid-1980s, own indigenous technology and manufacturing capacity was completed and emerged in to commercial sales (Bhargava 2009). Although not close to world state-of-the art PV module efficiency, India did develop indigenous capabilities in the field of PV
(Kathuria 2002). When demand from state-owned enterprises ceased in the mid-1990s, solar producers sought export markets which now take about 75% of industrial PV output (Mallett et al.
2009; Srinivasan 2005). However, the domestic market is set to grow with solar part of India’s climate strategy. The ‘National Solar Mission’, seeks to install 20 GW of solar PV and solar thermal power by 2020 (PVGroup 2009).
According to Mallett et al. (2009), there have been three approaches to obtain technologies by
Indian companies: licensing of patents; collaboration and acquisitions, such as strategic alliances, and joint ventures and other equity relations; and in-house R&D. In addition, collaboration with national research institutions and use of expired patents have been key inputs. A large number of solar PV production patents for mature mono- and multi-crystalline silicon cells have expired and the technology and have been picked up by many Indian manufacturers. In more advanced technologies where patents remain, it has been easy for Indian companies to acquire the technology through licensing agreements. However, Indian owned PV patents are on the rise and the domestic engineering and technical capabilities have proved important to pick up and refine technologies, and produce at a low cost.
Among Indian PV companies, Moser Baer Photo Voltaic is one major player. It emerged in 2005 as a subsidiary of an Indian multinational optical storage company and has its own PV cell manufacturing plants across the PV value chain. Moser Baer has used unconventional technology transfer strategies such as several strategic alliances and equity relations with foreign solar technology companies, in addition to an active acquisition of technology through a licensing agreement with Applied Materials to use its thin film photovoltaic module technology. The company also undertakes significant R&D in its own facilities in India and The Netherlands as well as jointly with various research institutions in
India and abroad, and now hold over 25 PV patents. There are also a number of other private and public-sector PV companies with in-house R&D as the primary source of technology. One other private company is HHV Solar which is engaged in both crystalline and thin film solar cell and module technology of which the majority is indigenously developed (ISA 2008). Another company, TATA
Power Company has since 1989 engaged in a joint venture in Bangalore with the British company, BP
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Solar. TATA BP Solar designs and manufactures both mono- and multi-crystalline silicon cells and modules. As many other companies, TATA BP Solar’s products include grid-connected modules as well as integrated systems such as building-integrated PV modules, home and street lighting, water pumping and heating.
The Indian solar PV case is a blend of conventional and unconventional technology transfer and indigenous technology, particularly a crucial effort in own R&D. Although not necessarily a state-ofthe-art industry, capabilities and cost advantages have enabled India to become a solar PV industry manufacturing at a relatively high quality and low cost. Even though linkages to foreign technology are strong in industry, there are not always transfer-transferee relationships and the source of competitiveness is as much the country’s own capabilities. Mallett et al. (Mallett et al. 2009: 73) find that “Indian firms actively drive the process and so play more a leadership role in the technology transfer process”.

Electric and hybrid electric vehicles in China
While it is difficult for car manufacturers in developing countries to catch-up with conventional global auto leaders with many decades of experience, latecomers have potential to leapfrog to electrical vehicles in two senses: to jump western carbon insensitive transport trajectories and to compete with global leaders in a relatively new technology with a more level playing field. The
Chinese government’s target is to become the leading market for electric vehicles by 2012 and has put in place a number of policies to aid its hope to leapfrog into the industry. There is an emphasis on R&D support for electric and hybrid vehicle manufactures; subsidies of about USD 7300 are provided to electric passenger car buyers, not least to taxi fleets and local government agencies; and electric two-wheelers are promoted by altogether banning conventional motorcycles and scooters in several provinces and cities, including Shanghai (IEA 2009; MOF and MOST 2009; Wang and Watson
2000).
In terms of the domestic market, two-wheeled electric vehicles are commonplace. With 65 million electric two-wheelers on the roads, China accounts for 90% of the world market and production capacity has increased dramatically to 22 million in a decade. Just three of the largest Chinese manufacturers of electric two-wheelers have a combined annual output of roughly 10 million vehicles in 2010 (Crachilov et al. 2009; The Economist 2010). In passenger cars, China’s market is still very small, as is the global market. But China aims to become the world largest producer of plug-in hybrid and electric passenger vehicles with an increase of its annual production to half a million by
2015, about 5% of China’s new vehicle sales. By now, China is also the leading producer of rechargeable batteries – a key, although far from exclusive technology, in the electric vehicle value chain. The electric auto or “new energy vehicles” industry in China is growing. There are some examples of both conventional and unconventional technology transfer routes into the market. Some joint ventures have emerged, largely as a response to the combination of market pull due to China’s mandatory emissions standards, currently stricter than those in the US, and government legislation requiring foreign auto companies to enter the domestic market only through a Chinese majority share joint venture (Ockwell et al. 2008). A number of Chinese companies, including the national champions, have all developed electric and hybrid vehicles through own technological resources, especially small-car versions (IEA 2009; People 's Daily Online 2009). China’s largest auto
13

manufacturer, Shanghai Automotive Industry Corporation has established a majority share joint venture with the US advanced lithium-ion battery company, A123 Systems to build electric cars.
However, SAIC is also developing an electronic drive system through in-house R&D – a USD 879 million project of which a third is assigned to R&D alone (Wang 2009). Another company, Chery
Auto, the largest private owned car manufacturer in China, have developed through own resources and commercialised a small electric car with a reported range of 150 km and a maximum speed of
120 km/h.
The national champion BYD, however, seems to take the lead in China. BYD, a long time producer of lithium-ion and other rechargeable batteries for cell phones and energy storage, acquired a small
Chinese car manufacturer, Qinchuan Automobile in 2003. BYD began producing regular vehicles alongside intensive in-house R&D to combine its battery technology with car-making. Over one billion RMB have been invested in this effort and the company employs over 10,000 engineers. Just the in-house electric vehicle battery R&D team, working on the 10 year project of advanced ironphosphate-based lithium-ion batteries, employs over 500 researchers (People 's Daily Online 2009;
Zhang and Cooke 2009). With a head start of a few years to key competitors such as Toyota and
General Motors, BYD introduced the world 's first mass produced plug-in hybrid electric vehicle in
2008 and several all-electric car models6. Although only a few models have been sold so far, its technology have been recognized putting the company atop of Business Week’s 2010 annual Tech
100 List and in the top-10 of Bloomberg BusinessWeek’s 2010 list of the world’s most innovative companies. A further indicator of the company’s capabilities is that BYD have established a R&D joint venture in which it will bring together Daimler’s car platform and BYD’s battery and electric motor technology to develop and design electric vehicles to be marketed by a joint brand (BYD 2010).
China’s electric auto industry shows that unconventional strategies have been more important than conventional, but that the technological trajectory owes other mechanisms altogether, in particular own capabilities and considerable investments in in-house R&D. This pathway may be longer and more difficult than relying on conventional technology transfer such as licensing or FDI, not least due to the complexity of electrical cars. However, as it is, China does have a growing electric vehicle and battery industry with genuine indigenous competences.

Electric and hybrid electric vehicles in India
India’s energy consuming transport sector is set to grow more in terms of energy demand than any other sector in India over the coming 30 years. This means that there is a huge potential for carbon abatement and that it is a key sector for Indian low carbon policy. With the Auto Fuel Policy in 2003, the Government of India has introduced auto emissions limits and standards comparable to the

6

The hybrid model, the FD3M, reportedly has a 100 kilometres range on a single charge. The technology is a series-parallel hybrid drivetrain in which the car can switch between the combustion engine recharging the batteries while driving on the electric motor and both the combustion engine and battery drive the wheels in parallel – in addition to all battery-driven drive. This technology is regarded as the most efficient and is closer to an electric car than, for instance, Toyota’s Prius which only supplements a combustion engine with an electric motor and battery. The first all electric auto by BYD, the E6 has a reported driving range of 300 kilometres on one charge.

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strict European standards with a five-to-ten year time lag depending on the vehicle type (Ockwell et al. 2008).7
While the hybrid electric vehicles market is only picking up in India, a number of Indian passenger car manufacturers have road-ready or demonstration models, including three of the leading companies: Reva Electric Car Company, TATA Motors and Bharat Heavy Electricals Limited. Some companies have also developed vans, buses, motorcycles, scooters and rickshaws. An example is
Bharat Heavy Electricals Limited which has developed electric buses, vans and special purpose vehicles for the government sector through in-house R&D (Awasthi 2009). However, the hybrid electric vehicle market in India is small and the industry is hardly at the technological frontier. Hybrid electric vehicles are rich on patented technology and the pathways to technology acquisition are mixed. Licensing, joint ventures and joint development with foreign firms has played a role in the
Indian industry. But Mallett et al. (Mallett et al. 2009: 85) notes that there are “strong domestic efforts to develop indigenous hybrid vehicle technology in India”, including in-house R&D with little influence of technology transfer. For example, the National Hybrid Propulsion Programme, initiated by the 2007 11th Five Year Plan shares R&D costs between government (70%) and industry (30%) and the IP emerging as a result of the efforts are shared among hybrid electric vehicle manufactures.
In the India electric auto industry, the strategies of technology acquisition have been as diverse as observed in the Indian hybrid industry. For example, India’s Hero Group has engaged in a joint venture with Honda to manufacture electric motorcycles and other two-wheelers and Tata Motors have acquired a majority stake Miljøbil Grenland/Innovasjon of Norway to utilize Tatas car platforms and the Norwegian company’s lithium ion battery technology to design an electric passenger car
(Mallett et al. 2009). One of the most renowned players is a joint venture. REVA was established in
1994 as R&D joint venture between the Maini Group (68% equity share) and the US company, AEV
(32%). The owner of the Maini Group was employed in AEV in California before establishing the joint venture in Bangalore. The two companies brought together electric vehicle expertise from both organisations, in particular IP developed in the US, but was established to conduct in-house R&D in combination with joint technical collaboration with other companies and strategic acquisition of patents (Bajaj 2009; Menon 2009). Seven years of research by REVA led to development and commercialisation of the first REVA electric car in 2001. The company sets aside about 7% of sales turnover for R&D (compared to about an Indian average of about 1%) and more than a quarter of company’s employees work in R&D and testing (Krishnan 2002). Later, more models, including a model using the high-efficiency lithium-ion batteries, have been marketed. REVA have also formed a technology cooperation joint venture with General Motors India to develop an electrical version of
GM’s small car, Chevrolet Spark – a venture in which GM obtain access and license to REVA’s technology, in particular electric drive-trains, batteries and control systems and REVA benefits from
GMs auto platform. REVA’s technology is reported to be as strong as the global car leaders’ for its small car niche and has more electrical vehicles on the market than any other player in the industry.
However, REVA is still a small company with relatively low sales and may have to use larger car players to access markets and intent to use franchise production and licence its technology in

7

In addition to hybrid and electric vehicles, the industry and market for alternative fuel vehicles in India also comprise compressed natural gas (CNG) vehicles. For government transport in major cities, the use of CNG vehicles is compulsory resulting in the world 's largest fleet of CNG buses in New Delhi and conversion of threewheeled rickshaws to CNG powered technology gaining significant traction.

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addition to selling under its own brand (Bajaj 2009). But in any case, the company expects growth.
By 2010, REVA had sold 3.500 electric vehicles (half of which is exported) and had a production capacity of 6,000. However, as new models enter the market, REVA have built a new factory with a five-fold increase in annual output capacity to 30,000 cars a year (Menon 2009). The REVA case is interesting since the company was an R&D joint venture, a strategic licensee of relevant patents coupled with an intensive in-house R&D effort with the result of building a strong technology with which it now carry out R&D collaboration and has become the licensor. The experience is not neatly placed in any single category of technology transfer with features of knowledge migration, joint venture and joint R&D. Rather, a number of unconventional technology transfers and other mechanisms have transformed into indigenous technology and low carbon innovation (Maini 2005).
The REVA case makes an example of an electric and hybrid electric vehicle industry which does not conform to the idea of conventional technology transfer.

Summary and conclusion
This section has shown that these key green technology sectors in India and China are managing the transition from production to innovation capability. While there are differences between sectors, the technological gap between China and India and so-called advanced economies is now small and decreasing. Important new technological advancements are created by national champions within these countries themselves and diffused internally and abroad. Furthermore, this section has shown that the development of technological innovation capabilities has relied on both conventional and unconventional technology transfer mechanisms as well as on non-transfer mechanism. Table 2 provides an overview of the mechanism identified at the sectoral level in the case studies. Moreover the table references the national champion companies, thereby showing which transfer mechanism have been important for the key firms in each sector The next section examines the nature of these mechanisms in more detail.

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Table 2: Technology transfer and the rise of green technology sectors: an overview
Technology transfer
Conventional
mechanisms

Case
1. Wind in China

Import
Joint ventures
FDI
Licensing (Goldwind,
Sinovel, Dongfang)

Unconventional mechanisms Joint R&D (Goldwind,
Sinovel, Dongfang)
Foreign acquisition
(Goldwind)
Overseas R&D
(Goldwind)

FDI

Foreign acquisition
(Suzlon)

Joint ventures

Localised innovation
In-house R&D
(Goldwind, Sinovel,
Dongfang)
Technology developed by or with local research institutions (Sinovel)

Joint R&D (Suzlon)

Licensing (Suzlon)

2. Wind in India

Other mechanisms

Overseas R&D (Suzlon)

Import

In-house R&D (Suzlon)

Local R&D by MNE
3. Solar PV in
China

Licensing (Suntech)

Foreign acquisition
(Suntech)

In-house R&D (Suntech,
Yingli, Trina Solar)

Overseas R&D (Suntech)

Joint ventures

Technology developed by or with local research institutions (Suntech,
Trina, Yingli)

Local R&D by MNE

4. Solar PV in
India

Joint ventures (TATA BP
Solar)
Licensing (Moser Baer)

Joint R&D (Moser Baer)
Global Joint Venture
(Moser Baer)
Overseas R&D (Moser
Baer)

In-house R&D (Moser
Baer, HHV Solar)
Technology developed by or with local research institutions (Moser
Baer)

5. Electric/Hybrid Joint ventures (SAIC)
Electric
Vehicles in
China

Joint R&D (BYD)

In-house R&D (BYD,
Cherry Auto, SAIC)

6. Electric/Hybrid Joint venture (REVA)
Electric
Licensing (REVA)
Vehicles in
India

Overseas R&D (TATA)

In-house R&D (REVA,
TATA, BHEL)

Joint R&D (REVA)
Foreign acquisition
(TATA)

Note: The table provides an overview of the transfer mechanisms identified at the sector level and provides references to the transfer mechanisms identified in the top-3 national champions (microlevel) where relevant. Mechanism which does not refer to a firm is only identified at the sectoral level but has had no practical relevance for national champions.

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4. The role of technology transfer
This section will provide a further analysis of the preceding six case studies with respect to the relative importance of different transfer mechanisms and non-transfer mechanism. The key question is what role conventional and unconventional technology transfer and endogenous technology creation have played and what their relative importance have been. In this analysis the focus is on the micro-level, that is, the role of technology transfer as a source of capability for the national green technology champions in China and India. In this respect the section also discusses the overall role of technology transfer mechanism under the UNFCCC.

The relative importance of conventional/unconventional technology transfer and other mechanisms
Table 3 shows the identified national champions in each sector and Table 4 provides a summary of the role of the different mechanisms. Based on the micro level study, the cases identify the prevailing technology transfer mechanisms vis-à-vis other mechanisms in the building of green technology capabilities in China and India. We discuss conventional mechanisms, unconventional mechanisms and other mechanisms in turn.
Conventional mechanisms: Import and FDI are mechanisms which have primarily worked at the sector-level and mainly in relation to industry formation. Although imports have played a surprisingly small role, import of turbines did play a role especially during the 1980s and 1990s in the wind sector. But the share of imported whole turbines in installations have declined when the sector took-off, and while imports of components have been on the rise, the share is also decreasing with the maturity of the sector. In the diffusion of solar PV and electric and hybrid autos, trade has also played only a minimal role. The experience is similar for local presence of foreign companies through
FDI as wholly-owned subsidiaries of MNC and joint ventures. In the wind sector both FDI and joint ventures does have a strong presence, but foreign companies’ market position is eclipsed by national champions. In the PV and electric vehicle sector some joint ventures are among the lead companies. However, production oriented joint ventures based on the foreign company’s technology are not the predominant model looking at any of the sectors as a whole.

Table 3: The key national champions
Wind

Solar

Electric and Hybrid

China

Goldwind
Sinovel
Dongfang

Suntech
Yingli,
Trina Solar

BYD
Cherry Auto
SAIC

India

Suzlon

Moser Baer
TATA BP Solar
HHV Solar

REVA,
TATA Motors
BHEL

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Table 4: Relative importance of conventional and unconventional technology transfer and endogenous technology creations in the rise of national champions in take-off and catch-up phases Wind

Solar

Electric/Hybrid Vehicles

Conventional transfer mechanisms
Trade (capital imports)

Low / Low

Low / Low

Low

Local joint venture with MNC

Low / Low

Medium / Medium

High

Technology licensing

High / Medium

Medium / High

Medium

Unconventional transfer mechanisms
Joint R&D with MNC

Medium / High

Low / Medium

High

Overseas R&D (inhouse)

Medium / High

Medium / Medium

Medium

Global joint venture
(overseas)

Low / Low

Low / Medium

Low

Foreign acquisition

Medium / High

Medium / Medium

Medium

Endogenous technology creations
Local in-house R&D

Medium / High

High / High

High

Local technology linkages Medium / High

Medium / High

Low

Note: Based on examination of national champion firms (micro level) listed in Table 1. The table refers to the ‘take-off phase’ on the left side of the slash and to the ‘catch up-phase’ on the right side (Take-off / Catch-up). The electric/hybrid vehicle sector is relatively young in both countries and the table does not distinguish between phases.
Low
=
Absent in examined firms;
Medium
=
Present in one or more examined firms;
High
=
Multiple occurrences and high practical impact

At the micro-level, there is no strong reference in the literature to capital imports and reverse engineering or technology spill-over from MNCs. Among joint ventures, only one in the solar sector has been identified as a national champion. Another conventional mechanism, licensing of technology, has played a more significant role with multiple occurrences and a high practical impact as an entry strategy for local companies in the take off phase. Especially in the wind and solar PV sectors, licensing strategies have enabled companies to enter the markets through complete technology packages from external partners. However, two developments in all sectors make licensing a minor mechanism in the catch up phases. First, India’s electric and hybrid electric auto industry is an example in which there has been extensive licensing but that internal capabilities and efforts have been crucial to make use of patents in own platforms and increase absorptive capacity.
Thus, licensing does make up a source of technology transfer but acquired IPR is placed within a technologically complex automobile of which most is indigenous technology. Secondly, while
19

licensing have played a role as entry strategies and probably will continue to play a role for many companies, many have developed very quickly into developing technology in-house or jointly with partners and thereby decreasing dependence on external patents in the technology portfolio.
Unconventional mechanisms: As the industries have matured, the role of conventional technology transfer as the dominant source of technology has declined. Rather, higher levels of cooperation and interaction and mobilization of own resources have become increasingly important. Three unconventional mechanisms have been particularly important: joint R&D, overseas R&D and acquisition of foreign companies. Joint R&D between companies in the Rising Powers and OECD, either on a project basis or in an innovation-oriented equity joint venture, has played a surprisingly strong role. Chinese and Indian green technology companies have either had technological capabilities to offer in symmetrical relationships to develop technologies jointly or have had resources to formulate new R&D needs from external organisations and participate through open innovation relationships. As mentioned, traditional licensing agreements in the wind industry have often evolved into symmetrical relationships. Foreign acquisitions of competitors, smaller innovative companies or key component suppliers have been a key strategy for some companies in all three sectors. Some of the lading wind companies in both India and China have acquired technologystrong European competitors to obtain a larger technology portfolio and a stronger R&D network. In this connection, overseas R&D have also been increasingly important for companies to combine own resources at home with foreign competence clusters to increase internal innovative capabilities.
There are a number of Chinese and Indian companies in all three sectors with increasing overseas
R&D operations in their wholly or majority owned facilities abroad.
Other mechanisms: While conventional technology transfer, and even more so, unconventional technology transfer, are mechanisms adding to the technological capabilities of the countries’ green sectors it is in-house R&D which is most striking as a source of innovative capabilities of the leading national companies. The analysis shows that none of the leading ‘national champions’ in the three sectors rely solely or even mainly on exogenous technology, but are increasingly innovative by mobilizing own resources. The important role of internal creation of technology is unsurprising, but it is not always given sufficient attention. The extent to which internal sources are the main drivers of catch-up has yet to be analysed in-depth, but it seems from this analysis that endogenous technology creation is becoming increasingly central in technology trajectories. This is an important lesson for the technology transfer debate in two ways. First, in-house R&D has become increasingly important with some occurrences in the take off phase and is now, during the catch up, a key source of competitiveness for the lead companies as standalone activities. In the rapid catch-up experience of wind, solar PV and electric and hybrid electric auto technology in the Rising Powers, in-house R&D has been a key feature of pace and depth of technological learning. Secondly, the pace of the technological development process has been set by leveraging technological learning by combining technology transfers with own localised innovation and own technology investments. In almost all cases have technology transfer mechanisms been complemented by in-house R&D. In other words, conventional technology transfer can hardly be understood in isolation and green technology industry in China and India are characterised by high degrees of internal efforts and investments.
To reiterate, conventional technology transfer mechanisms seem to have played some role during take-off in the selected industries, but their role have declined during the catch up phase. In fact, our findings ultimately suggests that catch-up was based on mechanism that involved limited ‘transfer’
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of technology in the conventional sense – i.e. they were practically based on mechanisms that were not ‘transfer’ of technology – and this finding has implications for the literature. There are two reasons for this. The first relates to the ‘transaction perspective’ of the technology transfer concept
(Reddy and Zhao 1990), i.e. the nature and degree of interaction. Contrary to the assumptions in the literature we find that: (i) transactions are increasingly interactive, involving two-way flows of information; (ii) learning and innovation therefore occurs on both sides (i.e. in home and host country); and (iii) relationships between the parties are increasingly dynamic and reciprocal.8
Transactions seemed to be more a reflection of the trend in which firms (on both sides) are decomposing their processes of learning and innovation across organisational-geographical boundaries and business functions such as R&D and product development (Schmitz and Strambach
2009).
The second relates to the so-called ‘host-country’ perspective of technology transfer (Reddy and
Zhao 1990), i.e. the degree of internal effort and investment in technology development. We find that the technology transfer concept is less applicable in the cases of India and China because the underlying assumption that they are more or less passive recipients is not substantiated in these cases. In reality these counties are making their own investments in key green technology sectors.
This aligns with the literature which has pointed out that technology imports and localised innovation is complementary processes that are required for the development innovative capability
(Bell 2009). The implication of this study is that the key capability for managing and changing technology is developed within rather than transferred to China and India. Our case studies thus suggest that localised investment in innovation was not only (i) a precondition/complement to technology transfer; to varying degrees it was also (ii) a substitute for technology transfer. To some degree such localised innovation was nested in linkages with local research institutions in the wind and solar sector, but it seems that it was often nested within firms. These points have further implications for the discussion of global mechanism and incentive systems of the climate regime.

The UNFCCC technology model and incentives mechanisms
To what extent does international climate policy support the successful transfer mechanisms and national sources of technology? The technology framework have had limited impact on on-theground transfer mechanisms for the reasons that it is information-oriented rather than actionoriented. This is especially the case for EGTT and TT:Clear as mentioned earlier (Thorne 2008).
Technology needs assessments is a bottom-up, country-driven approach and can help developing countries to identify opportunities and barriers for technology transfer, however without a direct link to the implementation of relevant measures as result hereof (Ockwell et al. 2010).
What about the transfer related global incentives mechanisms, CDM and GEF? Although electric cars and to some extent solar PV are negligible in the Rising Powers’ CDM projects, there are more than
100 CDM wind power projects registered in India and over 200 projects in China. The rather high generation costs make the contribution from CDM carbon credits to the profitability of wind power projects relatively small (Schneider et al. 2010). Accordingly, the CDM has primarily been a small contributor to the project finance rather than changing the creating new patterns of sourcing of
8

Furthermore, the role of traditional buyer-seller relationships in global value chains would be expected to be important (see also Federica and Antonello 2007; Juliane and Robert 2009) but did not seem to play a critical role per se, although such chains were more important in the solar sector compared to the wind turbine and electric and hybrid vehicle sectors.

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equipment. To assess the role of CDMs in technology transfer, there are two levels in focus. One level is the mechanism’s impact on diffusion of technology in target countries. This may have a climate benefit, but does not necessarily activate technology transfer as defined in this paper.
Another level is the transfer mechanisms underlying the supply of equipment for the projects (if any). As we have seen, international trade is only a minor component in the green technology trajectories. Accordingly, CDM projects may involve more than international trade in low carbon equipment; technologies are also sourced by a range of technology suppliers within the host economy, including from joint ventures, subsidiaries of MNCs and indigenous companies within own or licensed technology. Although most empirical literature on this issue find that more than half of
CDM projects involve technology transfer, this does not focus on this second level. Technology transfer is often assumed to be diffusion, import of equipment only or a statistical representation of undefined claims of technology transfer by project owners (Dechezlepretre et al. 2009; Seres et al.
2009). Rather, in the few studies in which technology transfer mechanisms are in focus, these are identified primarily as conventional mechanisms such as trade, licensing or FDI (Lema and Hansen
2010). However, while CDM contributes directly to diffusion of technology to varying degrees
(depending on the revenue impact of carbon credits), the relation between this global incentive mechanism and creation of new technology transfer mechanisms at the micro level is at best indirect. There is little empirical evidence that CDM activates new technology transfer mechanisms, let alone unconventional transfer mechanisms such as joint R&D. In the CDM wind power sector, for example, the vast majority of projects are supplied by companies in which conventional technology transfers have already taken place or by local technology (Lema and Hansen 2010). This implies that the CDM orientation towards carbon finance for diffusion results primarily in representation of conventional technology transfer but that even these are rarely a direct result of the mechanism.
The role of GEF in technology transfer is unfortunately not well documented. The fund has as a possibility within its mandate to provide financial support for technology transfer, including for mechanisms discussed in this paper. Some direct transfer projects, such as licensing of technology, have been supported by GEF. However, Ockwell et al. (2010) describes that the GEF have shifted from having technology transfer to build local manufacturing capacity as a central part of its operational strategy towards a market based approach in which diffusion is at the centre. Direct support to technology transfer, that is to support to transfer mechanism have ceased. As a result, the GEF, like the CDM, has become primarily a diffusion-oriented mechanism in which new technology transfer may or may not materialize. And for the same reason: while there is mitigation impact through incentives for diffusion of technology, there is not necessarily an activation of international cooperation and inter-firm interaction – depending on whether a mitigation project initiates such as a demand. More recently, the UNFCCC has requested the GEF to scale up transfer activities again. At COP14 in Poznan, the GEF’s Strategic Program on Technology Transfer was endorsed leading to USD 50 million to be allocated primarily to financing technology needs assessments and so-called pilot technology transfer projects (UNFCCC 2008b). There are some, although very few projects, which focuses on building technological capabilities in developing countries. Rather, GEF is primarily focused on providing financial incentives for deployment and diffusion of environmentally sound technologies and training and capacity building. Within the sectors and countries in focus in this paper, the GEF seems to have had a very limited direct contribution to technology transfer. There may be some exceptions. Both China and India have received funding for electric vehicle projects. These projects are demonstration of electric buses in
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China, a small marketing project of electric three-wheelers in India and an Indian cooperation project on high pressure copper die casting for electric motors. For wind, China has received funding for some diffusion. However, whether there are any linkages to international transfer mechanism is unknown for all projects9.
In sum – the UNFCCC model of technology transfer is primarily (i) facilitating information and (ii) mobilising finance for mitigation in developing countries. A key point is that the mechanism may be successful in diffusion of mitigation technology equipment and know how, but not necessarily in enhancing ‘transfer’ of the deeper technological capabilities that will ultimately be necessary underpinnings of a significant shift to low carbon development in high-growth economies.

Summary and conclusion
Two main conclusions arise from the analysis in this section. First, it appears that overall technology transfer was only one element in the development of these green technology champions in the
Asian driver countries. Endogenous technology creation was crucially important as a prerequisite (in creating absorptive capacity), a complement and an alternative to technology transfer. Second, unconventional technology transfer mechanism were more important than conventional ones in most cases. Policies and mechanisms under the UNFCCC have only played a minor role. Overall, the crucial ingredients were rarely knowledge embodied in ‘hardware’ or in a codified form such as in capital equipment. When it did take a codified form in licenses this was not stand-alone activities.
Rather, the crucial ingredients were knowledge and capabilities embodied in people, acquired through R&D networks and overseas investments in firms and technology alliances.
It is important to recognise, however, that the importance of different mechanism have changed between the take-off and catch-up phases of the industries. Overall, the conventional mechanisms were most important in the take-off phase of the national champions/sectors, and the unconventional mechanisms played a more important role in the catch-up phase than in the take-off phase. This is particularly important with respect to the lessons for other developing countries.

5. Implications for the technology transfer debate
Section 4 found that unconventional technology transfer and localised innovation plays an increasingly important role for technological development in the national champion firms. This section starts by asking how these insights relate to the current international climate regime. The first two subsections therefore (i) identify the key implications for technology transfer policy in the context of the UNFCCC and (ii) identify the implications localised innovation and creation of sustainability-oriented innovation systems. This discussion raises important issues related to reform of the technology transfer element of the global climate change regime. However, such reform is difficult because of the conflicting perspectives and interests involved in the UNFCCC negotiations.
The third subsection seeks to unpack these interests and perspectives and it draws on the case study material to raise fresh questions that may help to unlock the debate.

9

This information is based on the authors’ own project search and analysis of GEF projects. http://www.gefonline.org/ accessed 16. July 2010.

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Global incentive mechanisms and technology transfer policy
As it appears, the UNFCCC model has had a limited impact due to its focus on diffusion and indirectly on conventional mechanism. This is especially surprising with regard to CDM and GEF since these two global incentives mechanisms are hailed as the global mechanisms for climate technology transfer (e.g. World Bank. 2010: 294). The direct link from CDM and GEF to technology transfer and endogenous technology development is almost absent in both practical terms (what is observed) and in the raison d’être (what the mechanisms are actually designed to do). There is nothing inherent in the mechanisms, for instance, to incentivise directly micro-level unconventional technology transfer or in-house R&D by developing country companies. The UNFCCC model facilitates information and provides finance for diffusion – in which conventional mechanisms may be indirect results, if any – but does not include a dedicated mechanism for technology transfer, let alone unconventional transfer.
Part of the reason is the lack of explicit detailed conceptualisation of technology transfer and an operational system to reach the defined objective. The Convention is calling for parties to “take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies, know-how, practices and processes pertinent to climate change, in particular to developing countries” and developed countries are also committed to
“support the development and enhancement of endogenous capacities and technologies of developing country Parties” (UNFCCC 1992: Article 4.5). This implies that focus has been either on endogenous technology or technology transfer, and the latter has often been interpreted as diffusion only or conventional transfer mechanisms, as noted earlier. Only more recently have placeholders (i.e. non-binding texts for further negotiations) been created by the Bali Action Plan towards a new global climate agreement for unconventional mechanisms in its text on “technology transfer and development” including consideration of “cooperation on R&D” and “cooperative mechanisms” (UNFCCC 2007). This means that there is a gap between existing mechanisms which focuses on diffusion and conventional technology transfer and the negotiation texts which now also includes unconventional mechanisms and localised innovation. The fact is that the latter has not had a central role in either the negotiations or implementation. This is partly because there is a disagreement between developed and developing countries with former emphasising diffusion and conventional technology transfer and the latter emphasising especially endogenous technology (as will be discussed further below).
The empirical insights from this paper may warrant a closer look on the role of indigenous technology and cooperative efforts in the policy context. Two criteria which have been central to the
Rising Powers are (i) high levels of interaction and cooperation through unconventional technology transfer, and (ii) high levels of own efforts facilitated by investments in in-house R&D. This second issue is addressed below.

Sustainability-oriented innovation systems
The argument above relates to technology transfer and technological catch-up primarily from a firmlevel perspective. However, the review of the case studies also showed that the national perspective
– or to be more precise, the national and sectoral innovation systems in which firms are embedded – need to be taken into account. National innovation systems are typically seen as having two main elements, (i) interaction between national actors, both firms and other organisations and (ii) national institutional frameworks that regulate, influence and shape innovation. However, as
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emphasised by Stamm et al (2009) sustainability-oriented innovation systems (SoIS) are different from innovation systems in general because they address a double market failure: (i) the under investment in low carbon technology due to the non-appropriability of innovation in private sector firms and (ii) environmental externalities.
To a certain extent the sectors examined in this paper are embedded within or linked to such systems. Technological development has been supported by public investment in research in these low carbon technologies. In the wind power sector, for example, it was emphasised in Section 3 that
Indian research institutions have had a close interaction with wind energy industry companies with the result of improving technology through testing and demonstration. A similar innovation system function is widely acknowledged as a main source of technology development in the Danish wind industry (Kristinsson and Rao 2008). In China’s wind industry, R&D initiatives are also taken in partnerships between companies and institutions and large R&D subsidies have been granted with intentions of systemizing collaboration. A similar case is found in the PV industry in both countries.
Here, several companies are situated in the national SoIS with collaborative R&D projects with local research institutions. These systems also have international linkages such as the inwards flows of FDI in R&D. In both the wind and solar PV industries it was found that MNEs have begun to establish
R&D centres in China and India. Another example of linkages between systems in OECD and
China/India was, again, the Indian wind industry in which a national research institution in Denmark
(Risø National Energy Laboratory) cooperated with India to establish an Indian R&D, demonstration and testing institution (Centre for Wind Energy Technology). One additional lesson across the case studies is the important role of in-house R&D. This is not always viewed to have a central role in innovation systems, but our empirical work suggest its centrality in the formulation and development of SoIS.
These examples provided by our case studies are by no means conclusive on the strength of SoiS and their role in building technological capabilities. However, it can reasonably be proposed that such systems will gradually be build up and that the tendency of national champions to develop indigenous technology will enhance the interaction in national systems.
The question remains how the current climate regime can support this process. Some capacity building has been carried out, through the GEF for instance. But up to now, the technology framework of the UNFCCC have not had a focus on innovation systems for low carbon technologies – neither as a process of building national capacities nor as an unconventional technology transfer mechanism to provide for a globally linked SoIS. Only indirectly is the current UNFCCC model supporting the mechanisms found in this paper to have been main contributors to the rise of green technology sectors in China and India, including local innovation and elements of SoIS.
This raises the question of whether there is a need for a dedicated technology mechanism supporting the two broad areas identified to have worked well in the rising powers: internal technological capability development and external technology collaboration.
In the Copenhagen Accord, the result of COP15, it was agreed to establish a Technology Mechanism which, in the ongoing negotiations, have been translated as comprising a Technology Executive
Committee and a Technology Centre and Network. Whether and how this process will support green technology development in developing countries will be an issue for the negotiation process ahead.
One contentious issue is finance. The limited financial resources provided through the Convention
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will primarily be allocated to mitigation and adaptation to climate change. One option is to have a
Green Climate Fund – as already decided upon at COP15 – to provide finance for mitigation projects in which (unconventional) technology transfer and local technology development are integrated components eligible for support.
This would be a country-driven approach with technology transfer linked directly to mitigation and adaptation. Where feasible, this should include support for unconventional transfer mechanism.
However, one of the key lessons emerging from this paper seems to be that context-specific technology transfer policy is necessary. This also implies that the policies which work for China and
India may be very different for countries with other needs, such as Least Developed Countries.
Technology Needs Assessments and national mitigation strategies are very valuable instruments if these can be linked and matched to the mechanisms for technology transfer and development.

Low carbon technology transfer: unlocking the debate
Section 3 and 4 showed that that when it comes to China and India the UNFCCC discourse on technology transfer is increasingly being superseded by reality. In reality, these countries are making their own investments. However, it is still a complex issue because officially these countries still insists on the creation of transfer mechanisms to get preferential access to technology and to take leadership in the group of developing countries
As mentioned, technology transfer has become a key part in the more controversial elements of the negotiations over the global collective response to climate change under the UNFCCC (Ockwell et al.
2009). As noted, it is a basic premise for the UNFCCC that technology transfer should be a part of the solution to the global negotiations on climate change. The issue is contentions because publically developing countries are likely to insist on bringing this into the deal as a requirement for further action on their behalf. Technology transfer was also discussed in the Copenhagen COP15 but progress on this issue was limited. Notably the issue of intellectual property rights was pushed to the side entirely as it was seen as too controversial.
The negotiations are slow moving due to different perspectives on technology transfer and different underlying motivations. For developed countries, technology transfer often means export of green technologies. For developing countries it often means access to intellectual property rights and development of technological capabilities and green industries. But even within countries there are different perspectives. Between those concerned with national economic interests and competiveness and those concerned with technology transfer for mitigation and adaptation as a public good. The public goods perspective tends to emphasise diffusion. But even so there are differences between developed and developing countries. OECD countries tend to emphasise diffusion of capital equipment. Developing countries tend to emphasise the importance of the associated diffusion of skills and capabilities. The alignment of interests is difficult even within countries and this difficulty is amplified significantly when elevated to the bilateral and international levels (Lema and Schmitz 2010).
The different perspectives mentioned above are illustrated in Figure 2. This figure serves two purposes: First it helps to identify different policy audiences. Second, it helps to identify the different tensions and trade-offs between the different policy stakeholders. They have different motivations

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for technology transfer and the identification of these is fundamental for raising fresh questions about technology transfer.
Figure 2: Different perspectives on low carbon technology transfer
OECD Countries

Rising Powers

Public goods perspective 1 – Diffusion (capital equipment) 2 – Diffusion (skills and capabilities) National interest perspective 3 – Export of clean technology

4 – Preferential access to new technologies; development of competitive green industries

One stakeholder group is concerned with combating climate change as a primary objective and one group takes a public goods perspective. So what is the relevance of the ‘Rise of Asia’ in green technology and the implications for the debate over technology transfer? If the aim is to diffuse technology, it may be time to raise the issue of reverse technology transfer from South to North given the overall cost reduction that may be achieved. Should we not use cheaper Asian technology, rather than more expensive technologies produced in the west? This is already – but slowly beginning to happen in the wind power and electric and hybrid electric automobile sector and it will become increasingly important in the future. Another issue relevant to this stakeholder group is the finding of Section 3 that IPR have not been a major hindrance for capability accumulation in China and India. If the issue is diffusion, does china and India really need preferential access to intellectual property? Or do they now have the technological capabilities and resources to cater for our own technology needs in this respect? Raising such questions are important because the issue of IPR is particularly challenging in the negotiations (Ockwell et al. 2008). In general, IPRs are not owned by governments but by private firms (Lee et al. 2009) and in long run firms in China and India will themselves have an interest in maintaining an intellectual property regime which can secure the appropriation of investments in R&D.
A different type of stakeholder group is primarily interested in national competitiveness, local jobs and prosperity. In the OECD perspective, it is an open question whether this stakeholder group should support a shift from technology transfer to technological cooperation – in order to maximise its own benefit. But this is a double edged sword. On the one hand, technological dynamism is moving East and firms in the West need to form strategic partnerships in the Rising Powers to grow.
On the other hand, this may be strengthening the position of firms in Asian countries. The combination of access and partnership with traditional technology leaders in high-end markets and low production costs is perceived as a threat (Stamm et al. 2009). Firms in the West and their government will be increasingly concerned with squaring this circle and the inclusion of this issue and perspective is important overall. In the Rising Power countries, a key question central to national interest perspective is the following: Since national champion firms are making the transition to become market leaders, how can mechanisms in the technology transfer field policy further support this transition? Can technology transfer funds be used to strengthen sustainability-

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oriented innovations systems? For instance, could they support the build-up of global standard certification and quality assurance institutions?
The UNFCCC is faced with the difficult task of accommodating all four perspectives in Figure 2 in the policy negotiations. To be sure, the issue about technology transfer will not be solved in isolation. It will go hand in hand with broader issues about carbon emission reduction commitments. So it will not be solved unless there is an alignment of interests between the different stakeholders. This alignment will depend partly on the way policy questions are posed and the rise of China and India in green technology sectors provides ample opportunities to raise fresh questions.

6. Conclusions and issues for research
The starting point for this paper was the connection between the mounting shift from production to innovation capability in China and India (Altenburg et al. 2008; Ely and Scoones 2009) and the debate over the global transfer of green technology (IPCC 2007; Ockwell et al. 2008; Schneider et al.
2008). As China and India are making the transition from users to producers of green technology, this has increasingly important implications for the low carbon technology transfer debate and policy process. How relevant is the UNFCCC technology model given this green technology progress in the Rising
Powers? The model, in particular the existing information-oriented technology framework and the diffusion-oriented global incentives mechanisms have a limited or at best indirect impact on actual technology transfer as discussed above. The discourse also tends to centre on diffusion and conventional mechanisms. However, given large developing country differences, the climate technology transfer agenda and policy could benefit from a more context-specific approach in which mechanisms are closer – if not tailor-made – to actual technology needs. For the Rising Powers, the
Convention language on ‘endogenous capacities and technology’ and the nascent focus on
‘international R&D collaboration’ and other cooperative mechanisms in the UNFCCC (2007, 2008a,
2009) could be strengthened and gradually replace the discussion of transfer in certain sectors for advanced developing countries. It may not be ‘withering of technology transfer’ in the climate regime, but it would build upon and diversify the discourse, negotiation texts and the incentives mechanisms supporting global technology collaboration (in this paper discussed under the heading
‘unconventional transfer mechanisms’) and local innovation. To varying degrees, this is a more relevant approach for supporting technology development and mitigation in the green technology sectors, not only in India and China but also the two other ‘Basic Countries’ – Brazil and South Africa
– and other middle income countries.
The analysis thus suggested that that there is limited practical mileage left in the conventional approach to technology transfer in the chosen sectors. Key national firms are closing the gap in capabilities vis-á-vis firms in OECD countries. While technology transfer has an important element – but only on element – in the process of gaining increasing maturity in these green technology sectors, the relevance of technology transfer has declined with this increasing maturity. The conventional focus on trade in capital equipment, licensing and inward FDI (Schneider et al. 2008) is no longer viable for these countries. Mechanisms such as investment in internal R&D, global R&D collaboration and outward knowledge-seeking FDI are increasingly important.

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There is also limited analytical mileage left in the technology transfer concept. In reality, technology can be transferred only in a very narrow sense and only provided that one adopts an outdated notion of technology itself, i.e. technology as capital equipment and other types of hardware artefacts. Low carbon innovation and learning are more useful concepts. To understand how the chosen sectors can be supported in India and China it is typically less useful to focus on pre-defined and given technologies which exist in OECD countries and the barriers to their transfer. It is more useful to start with the perspective of existing and potential technology producers in the Rising
Powers and the existing barriers and drivers of learning and innovation. If the technology transfer concept should not be discarded altogether, it needs at least to be situated within a broader conceptualisation of technology development, learning and innovation.
The critique of the technology transfer paradigm is not new, neither in general (Shamsavari 2007) nor in relation to climate change (Kulkarni 2003). Implicitly much of this critique is based on the general insight that capabilities are built and acquired rather than transferred. In this study we found support for this argument. The case studies showed that capabilities were often built and acquired through firm internal investments in learning and innovation. And they were acquired directly on the market by the takeover of foreign firms or through the buy-in of expertise from abroad. Capabilities were not mainly a result of general or dedicated transfer mechanisms of the climate regime. These findings are significant and add to the critique of the conventional technology transfer paradigm in general because of the prevalence of highly developed institutional frameworks and incentive mechanism to support technology transfer for climate change mitigation. In this respect, if technology transfer was not a decisive factor in the climate case, it cannot be expected to be so in other sectors.
In assessing the scope and weight of this point it is important to have in mind that we have focused mainly on national champions (i.e. successful cases) and that the sectoral focus of the case studies was narrow. It remains an open question whether similar conclusion would be reached in studies of areas such as carbon reduction innovation in ‘mainstream’ power supply (for example higher efficiency coal fired power generation or carbon capture and storage) and energy efficiency technologies in industrial production. As emphasised by Bell (1990) already 20 years ago, issues about new technology and the carbon intensity of power supply cannot be isolated from more pervasive issues about (in)efficiency of technologies existing technologies in use in this sector; and some of the greatest opportunities for low carbon innovation are perhaps in materials-intensive and energy-intensive sectors. In these areas China and India seem still to be lagging considerably behind levels of efficiency in OECD countries (IEA 2010).
The reservations noted above need to be acknowledged but the insights of this paper do nevertheless have implications that should be explored in further research. We set out here questions for future research that are related to the implication for OECD countries and developing countries. For OECD countries, future research should seek to identify the prospects for competition, conflict and collaboration given the advanced in building up innovative capabilities in the identified low carbon sectors. This will involve the identification of the key actors and their interests both in
OECD countries and the Rising Powers (see section 5). It is clear that many OECD countries are in the lead with regard to technologies that mitigate the effects of climate change. At the same time actors in these countries will depend on the involvement of Chinese and Indian firms and institutions. In this respect it is crucial that the specific conditions and circumstances for technology development in
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the Rising Powers – particularly the combination of strong capabilities and economic power with large pockets of poverty (Humphrey and Messner 2008) – are likely to shape the technological trajectories. Future research should examine how these trajectories affect complementarity and competition. In terms of competitive relations many OECD countries have opted for green job creation in general and in response to the economic crisis in particular. In a country like Denmark it has long been assumed that the appropriate response to globalisation and competitive pressures in these industries is a further enhancement of R&D, innovation and adaptability (Lema and Schmitz
2010). However, this study suggests that in itself it may not be enough and this recipe may therefore become outdated sooner rather than later. This brings us into unchartered territory and it raises issue about destination and navigation. The global organisation of innovative activities identified here is likely to become central in this regard. The question in this respect is how the global organisational decomposition of the innovation process (Schmitz and Strambach 2009) affect the innovation performance in OECD countries vis-a-vis the Rising Power Countries.
In developing countries, one prominent issue is how various technology transfer mechanisms and sustainability oriented innovation systems can complement each other and the extent to which developing countries should seek changes in global mechanisms for support hereof. This raises a need for continued empirical insights of low carbon innovation and development and a climate negotiation perspective on the issue. Another key question is whether technologies developed under political and natural conditions and factors endowments of the Rising Powers will be more adequate than those developed in the OECD (Stamm et al. 2009: 22). Are low carbon technologies developed in India and China more appropriate to LDCs in Africa and Asia compared to those developed in OECD countries? The guiding hypothesis is that such user-driven technology developed in India and China will be more suitable for the needs of poor countries (Kaplinsky and Messner
2008). Such research is needed because much of the previous debate has been over the scale of innovation capability building as opposed to the direction (Bell 2009). The notion of technology transfer implies an adherence to given technological paths. However, as China and India are moving
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