The Challenge of Low-Carbon Development - World Bank Internet ...

ConclusionsThe WBG’s efforts to promote technologies have often foundered.There is a recurrent set of factors in these failures:• The projects often did not set out a clear logical frameworklinking interventions to technological progress.Efforts to support upstream technologies have been fartoo small by themselves to advance those technologiesalong a global learning curve.• New technologies inherently have few suppliers andpoorly known costs. The World Bank’s procurementsystem is not well adapted for these situations.• A combination of inexperienced entrepreneurs and unfamiliartechnology constitutes a double set of hurdles.REDP, however, shows that it is possible to address bothchallenges.• “Demonstration” projects fail if private companies, understandably,want to keep technologies proprietary.Successful projects, in contrast, planned well for demonstration,learning, and diffusion. REDP supported technologicalprogress in many competing firms, stimulating theindustry’s growth. The Energy Conservation Project introducedthe institutional technology of energy performancecontracting and arranged for beneficiary firms to participatein demonstration, while they adapted the practice tolocal conditions. It also disseminated 75 specific techniquesfor industrial energy conservation.The Regional Silvopastoral Project rigorously documentedand publicized its achievements in boosting farm productivityand sustainability, which facilitated scale-up. Thereare signs that some of these lessons are being incorporatedin new efforts. The GEF Evaluation Office cites a UnitedNations Development Programme energy efficiency projectthat was carefully designed for replication and successfullydid that (NCSTE 2009).Successful projects planned well fordemonstration, learning, and diffusion.Technology transfer projects face a number of barriers anddisincentives. Smaller (more pilot-like) projects may havedisproportionately high costs of preparing and supervising,including effective design and monitoring of diffusionimpacts. Borrowers—and country directors—mayperceive (correctly or not) that these projects are risky.Projects that involve less-commercial technologies mayrun into procurement issues beyond the expertise of moststaff. Projects may also involve complex issues of intellectualproperty rights.Should the WBG support the development of technologiesproprietary to individual companies? Under what circumstancesshould publicly supported technologies be providedopen source, as a public good, to an entire industry?Technology transfer projects face a numberof barriers and disincentives.Addressing these barriers requires a host of instruments.The prominence of GEF and donor funding points to concessionalfunds as one way to overcome borrower riskaversion and to support higher preparation and supervisioncosts. Staff and management incentives need to beaddressed—at the very least, by ensuring that pilot anddemonstration projects are assessed as pilots, with recognitionof the benefit of informative “failures.” The WBGshould consider setting up a physical or virtual technologyunit as a resource for project teams. The unit could provideadvice on procurement, IPRs, diffusion mechanisms, andmonitoring. It could also advise on the advantages and risksof engaging with less-mature technologies.The WBG should be cautious about trying to advance technologiesat the global level. It has little direct experiencewith upstream technology development. There is, however,an a priori argument for research and developmentsupport for technologies that reduce poverty and are easyto replicate—meaning that there is little private sector interestin them. These might include, for instance, farmingtechniques such as biochar (which increase soil fertility andsequester carbon), improved cookstoves, and techniquesfor reducing urban heat island effects.To make a global difference at the scale-up stage—push atechnology down the cost curve at the global level—thescale of intervention needs to be large relative to cumulativeglobal production. For instance, WBG and Clean TechnologyFund resources are large enough, if leveraged, to significantlyincrease the global capacity of CSP but are small comparedto the global investment needed to advance carboncapture and storage. And such efforts require weighing therelative merits of a purely country-based approach with onebased on global procurement. For example, there are potentialadvantages and disadvantages of a single global tenderfor CSP plants (resulting in a standardized design, witheconomies of scale and competition) versus a series of separatesmaller tenders in different countries (developing moretechnology paths, but not moving far along each one).These choices involve some degree of “picking winners,”which requires balancing risks against rewards. If the WBGgets involved in these activities, it needs to develop (or coordinatewith others) a clear technology map with goalsand exit criteria.Carbon Finance at the WBGThe UNFCCC, to which virtually all countries subscribe,has the goal of stabilizing atmospheric GHGs to head offdangerous climate impacts. The carbon market, a creationSpecial Topics | 71