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62–451 2010

CLIMATE FOR INNOVATION: TECHNOLOGY AND 

INTELLECTUAL PROPERTY IN GLOBAL CLIMATE 

SOLUTIONS 

HEARING 

BEFORE THE

SELECT COMMITTEE ON 

ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 29, 2009 

Serial No. 111–8 

( 

Printed for the use of the Select Committee on 

Energy Independence and Global Warming 

globalwarming.house.gov 

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SELECT COMMITTEE ON ENERGY INDEPENDENCE 

AND GLOBAL WARMING 

EDWARD J. MARKEY, Massachusetts, Chairman 

EARL BLUMENAUER, Oregon 

JAY INSLEE, Washington 

JOHN B. LARSON, Connecticut 

HILDA L. SOLIS, California 

STEPHANIE HERSETH SANDLIN, 

South Dakota 

EMANUEL CLEAVER, Missouri 

JOHN J. HALL, New York 

JERRY MCNERNEY, California 

F. JAMES SENSENBRENNER, JR., 

Wisconsin, Ranking Member 

JOHN B. SHADEGG, Arizona 

GREG WALDEN, Oregon 

CANDICE S. MILLER, Michigan 

JOHN SULLIVAN, Oklahoma 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

GERARD J. WALDRON, Staff Director 

ALIYA BRODSKY, Chief Clerk 

BART FORSYTH, Minority Staff Director 

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C O N T E N T S 

Page 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1 

Prepared statement .......................................................................................... 3 

Hon. F. James Sensenbrenner, Jr., a Representative in Congress from the 

State of Wisconsin, opening statement .............................................................. 5 

Hon. Jay Inslee, a Representative in Congress from the State of Washington, 

opening statement ................................................................................................ 6 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 7 

Prepared Statement ......................................................................................... 9 

Hon. Emanuel Cleaver II, a Representative in Congress from the State of 

Missouri, opening statement ............................................................................... 11 

Hon. John Salazar, a Representative in Congress from the State of Colorado, 

prepared statement .............................................................................................. 12 

WITNESSES

Statements of Govi Rao, Chairman, Lighting Science Group Corporation ......... 14 

Prepared Statement ......................................................................................... 17 

Answers to submitted questions ...................................................................... 90 

Robert T. Nelsen, Co-Founder and Managing Director, Arch Venture Partners ........................................................................................................................ 26

Prepared Statement ......................................................................................... 28 

Jennifer Haverkamp, Managing Director for International Policy and Negotiations, Environmental Defense Fund ................................................................... 35 

Prepared Statement ......................................................................................... 38 

Mark Esper, Executive Vice President, Global Intellectual Property Center, 

U.S. Chamber Of Commerce ............................................................................... 57 

Prepared Statement ......................................................................................... 60 

Answers to submitted questions ...................................................................... 100 

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CLIMATE FOR INNOVATION: TECHNOLOGY 

AND INTELLECTUAL PROPERTY IN GLOBAL 

CLIMATE SOLUTIONS 

WEDNESDAY, JULY 29, 2009 

HOUSE OF REPRESENTATIVES, 

SELECT COMMITTEE ON ENERGY INDEPENDENCE

AND GLOBAL WARMING, 

Washington, DC. 

The committee met, pursuant to call, at 9:38 a.m. in Room 210, 

Cannon House Office Building, Hon. Edward J. Markey [chairman 

of the committee] presiding. 

Present: Representatives Markey, Inslee, Cleaver, Sensenbrenner, and Blackburn. 

Staff present: Camilla Bausch. 

The CHAIRMAN. Today, the Select Committee will hold a hearing 

to focus on an issue that underlies all of our discussions on technology but which is often overlooked: intellectual property rights 

and the role they play in developing clean technology solutions. 

The gentlemen from Wisconsin, Mr. Sensenbrenner, is a leading 

congressional authority on intellectual property rights; and during 

our recent trip to China, he constantly reminded our Chinese host 

that technology must solve the problems of energy security and climate change, but, to do so effectively, we need a rigorous system 

to protect intellectual property. I share that view, and we are having this hearing to explore those issues. 

There is a huge and growing demand for climate-related technologies. It can and should be met by inventions of American companies. America is well-equipped to lead and provide the cuttingedge technologies we so urgently need for solving the climate and 

energy challenges, but we need to develop the solutions for tomorrow and then deploy them worldwide. 

Passage of the American Clean Energy and Security Act will 

push entrepreneurs and college kids, Silicon Valley stars and Stanford roommates to work hard and to try their luck at inventing 

new ways to produce renewable energy and reduce greenhouse gas 

emissions. When those entrepreneurs succeed, what will happen to 

their product and know-how? That is the question we will explore 

today. 

In the upcoming Copenhagen negotiations, technology cooperation will be an important topic as countries look for ways to enhance deployment of climate technology around the world. At the 

international level, there is a consensus that clean technologies 

have to be developed and deployed and that the current efforts in 

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this respect have to be enhanced. There is also general agreement 

that the private and public sector will have to find new and better 

ways to bring those solutions to the villages of India and the towns 

in South Africa. But although countries might agree on the general 

direction, there are very different ways to achieve the goals. With 

only 130 days left until the Copenhagen negotiations, the world 

faces great challenges to find agreement on how to address the 

technology challenge. 

Today is a good time to take a close look at business opportunities, at technology cooperation, at barriers to spreading solutions, 

and at the closely related question of the protection of intellectual 

property rights. Intellectual property rights enable innovators to be 

rewarded for their creativity and investment of time and money, 

but these rights must be balanced with the need for incentives and 

the common good in the interest of sharing ideas and technology. 

This is why in the U.S. we have time limits on patents and copyrights. This is why the United States and all members of the World 

Trade Organization agree on the treaty which outlines how intellectual property rights should be protected on a global basis. 

We have the international framework in place, although I appreciate there are disagreements as to how well that framework operates in daily practice. Nonetheless, I think it is important to see 

if we can develop policies within this framework that can trigger 

the innovation and deployment that we want. With American ingenuity, we have become the world leaders in communications and 

information technology. Let us again embrace our opportunities for 

our country and businesses so that they can lead the world to a low 

carbon future. 

Because this is our last hearing before the recess, I would also 

like to take a minute to recognize the retirement of—where is Tom? 

Tom is not here? Oh, God—Tom Weimer, who is already in retirement. 

I have worked with Tom starting back in the early 1980s when 

I chaired my first subcommittee, the Oversight and Investigations 

Subcommittee, in the old Interior Committee; and Tom worked on 

the staff of Manny Lujan. Tom gave many distinguished years of 

service to that committee and then at the Interior Department, and 

I was pleased to work and travel with him over the past 3 years 

as part of the Select Committee staff. He was a consummate professional who was always fair and committed to the work of this 

institution. I know that he cannot be here today, but I did want 

to take this opportunity to congratulate him for his long and successful career in public service. 

That completes my opening statement. 

I turn and recognize the ranking member, the gentleman from 

Wisconsin, Mr. Sensenbrenner. 

[The prepared statement of Mr. Markey follows:] 

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Mr. SENSENBRENNER. Mr. Chairman, let me say that I deeply appreciate the comments that you have made on the retirement of the 

Republican Staff Director of the Select Committee, Tom Weimer. 

When I recruited Tom for this job, his extensive background both 

on the Hill and in the Interior Department on energy issues was 

invaluable in helping get the committee off the ground. Despite the 

fact that the chairman and I have some rather deep disagreements 

over how to go about solving the problems of climate change and 

energy security, Tom has worked very professionally with the 

Democratic staff in order to make the work of the Select Committee 

a success. 

After hearing your good words about Tom, I am going to make 

an offer to you. Over here on the Republican side, anybody that 

uses the word ‘‘cap-and-trade’’ instead of ‘‘cap-and-tax’’ ends up 

having to buy a round of refreshments for everybody else; and Mr. 

Weimer does owe a couple of rounds for letting the wrong language 

slip out. And when we have payback time, Mr. Chairman, I will be 

sure to invite you so that you can enjoy the results of Mr. Weimer’s 

slipping up on what the Waxman-Markey bill really is. So stay 

tuned. 

Now as far as my opening statement—— 

The CHAIRMAN. Can I say we have the same thing on our side? 

Anyone who uses the phrase ‘‘cap-and-trade’’ is similarly punished. 

Instead, they must use the words ‘‘energy independence’’ and ‘‘clean 

energy jobs revolution.’’ So we have a similar fund on our side that 

we might be able to work with you and have a really good party. 

Mr. SENSENBRENNER. I thank the Chair for those very good 

words. And, remember, some words count; and some words don’t. 

I am glad you agree that ‘‘cap-and-trade’’ is a bad word. 

Having said all of that, my opening statement. 

Global warming has become less about science and opportunism. 

Soon after scientists rang alarm bells on carbon emissions, everyone from financial institutions to developing nations realized that 

they could get rich off of it. So while scientists continue to debate 

the best course of action, those with vested interest declare that 

the science is settled and offer solutions that conveniently would 

also make them rich. But we can’t allow the need for action to 

make us victims of self-serving proposals against American interests. 

Efforts to weaken intellectual property rights at the ongoing U.N. 

climate change negotiations are a perfect example. Developing 

countries like China and India see climate change as an opportunity to gain free access to American IPR. But far from mitigating 

climate change, relaxation of IPR would ruin our and the world’s 

only hope of responding in a long-term way. 

China, along with other developing nations in the so-called 

Group of 77, wants the U.N. to establish an ‘‘executive body of 

technology’’ that would be governed by many of these same countries. The Chinese and others propose that this body would determine ‘‘technology related financial requirements’’ and seek to ensure that privately owned technologies are available, despite the intellectual property protections. Put simply, China and the developing nations seek to transfer the developed world’s clean energy 

technologies to an unelected U.N. body which they would control. 

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The current draft U.N. negotiating text that will be considered 

in Bonn early next month includes proposals that would ‘‘exclude 

from happening in developing countries environmentally sound 

technologies to adapt to or mitigate climate change,’’ require ‘‘compulsory licensing for environmentally safe and sound technologies,’’ 

and to ensure ‘‘access to intellectual property protected technologies 

and associated know-how to developing countries on nonexclusive 

royalty free terms.’’ 

These governments argue that the risk of climate change justify 

free access to technologies to help mitigate them. The result would 

be a transfer of billions of dollars worth of the latest technologies. 

But the argument mistakes or willfully ignores the truth that technology is not a natural resource that can be pulled from the 

ground. New technologies will exist only if there are incentives to 

create them; and innovators should know that if they invest their 

time and money, their innovations will be protected, not given 

away. 

Chairman Markey and I respectfully disagree on how best to respond to climate change, but I think we agree that advanced technologies will ultimately be the long-term solution. Whether we 

adopt new taxes or a more economic approach, which I advocate, 

companies won’t invest in new technologies unless we have strong 

IPR to protect them and that IPR is enforced. As Steve Flutter, 

head of the Electro-Imagination Division of General Electric, has 

told the New York Times, ‘‘Why would anybody invest in anything 

that they would just have to give away?’’ 

China and India in particular have a checkered history of protecting IPR. The U.S. Trade Representative reported to Congress in 

April that neither China nor India provide an adequate level of IPR 

protection or enforcement or market action access for people relying 

on intellectual property protections and placed both on its priority 

watch list of the worst offenders. 

The Trade Representative’s report said overall piracy and counterfeiting levels in China remained unacceptably high in 2008 and 

that its IPR enforcement regime remains largely ineffective and 

non-deterred, while privacy and counterfeiting, including pharmaceuticals, remain a serious problem in India and its IPR enforcement regime remains weak. 

Rather than demanding free access to new technologies, if developing countries want to mitigate climate change, they should 

pledge to protect them so that the investments will be made to develop those new technologies. 

As the world works toward a new international agreement on climate change, I urge the Obama administration to end hopes that 

IPR will be freely granted by proposing new language for a climate 

change treaty that strengthens intellectual property and promises 

to protect and encourage technological innovation. 

I thank the Chair. 

The CHAIRMAN. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Washington State, Mr. 

Inslee. 

Mr. INSLEE. Thank you. 

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I want to welcome my constituent neighbor. Robert Nelsen is 

here today with ARCH Venture Partners. He embodies the spirit 

of innovation, and I look forward to his testimony. 

I also have a little token of our appreciation, Mr. Chairman, for 

your leadership. This is a little bit of Sapphire Energy’s algaebased biofuels, and this will get you the last half mile to drive to 

the White House for the signing ceremony for the ACES bill. We 

just want to make sure that you get to the South Lawn. We have 

a little work between now and then, but that will get you there. 

The CHAIRMAN. Thank you so much. 

Mr. INSLEE. I want to make one serious comment. 

The CHAIRMAN. This is serious. There is nothing more serious 

than algae. 

Mr. INSLEE. The issue of intellectual property, to me, if we were 

going to be assisting the developing world—and it is a serious 

issue, but it ought not to be at the expense of innovators, and it 

ought not to be in a way that depresses and suppresses innovation. 

If we are going to be providing assistance to make new technologies 

available to the developing world, it ought to be based in a way 

that the community as a whole finances it, rather than just the innovation community. To do otherwise really suppresses and prevents the innovation from coming into existence that we might be 

able to share and/or sell to the developing world. 

So I just want to make the point, and I know that we will talk 

about this today, that the worst way to share is to do something 

that would prevent that which you seek to share from ever coming 

into being; and when in fact you deprive folks of intellectual property, in fact that is what has happened. So there are better ways 

to do that, and I look forward to this discussion. Thank you. 

The CHAIRMAN. The Chair recognizes the gentlelady from Tennessee, Mrs. Blackburn. 

Mrs. BLACKBURN. Mr. Chairman, I am delighted we are having 

this hearing today. I do think it is an imperative that the Federal 

Government protect the intellectual property rights of our 

innovators. 

One of the things that I realized as we were working on preparation for this hearing is that, over the past 7 years, all of the clean 

energy technology patents that have been put in place, 50 percent 

of those are U.S. innovators. So we are deeply invested in making 

certain that we protect that 50 percent of all of the patents that 

are held by U.S. citizens. 

It is of concern to me that there are new developments in international law and international agreements that may threaten these 

rights and lead to some outright piracy and theft of some of these 

patent-protected technologies. I am concerned, too, about the climate fund accounts as a price for participation in any treaty or 

agreement with carbon emissions. I am concerned about compulsory licensing and preferential pricing of low-carbon technologies 

that are coming into the marketplace. 

So those are all things that I am going to want to take a look 

at as we have this hearing, because I think we have to be careful 

that we don’t barter or give away any of the work that has been 

done by our innovative community, our creative community. 

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I thank you for the hearing and look forward to what the witnesses have to say. 

[The prepared statement of Ms. Blackburn follows:] 

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The CHAIRMAN. I thank the gentlelady. 

The Chair recognizes the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

My son is an actor in California. Of course, at this point I am 

paying for his acting, and I think I am the only one who has rented 

the movie that is at Blockbuster, but I never thought about intellectual property rights until he brought it to my attention. Nobody 

is going to steal a line from the movie he is in, but I am aware 

of it, and I have been thrown into a controversy here—and I know 

Mr. Sensenbrenner is on the Judiciary Committee—with the royalties related to many of the iconic performers of the ’60s and ’70s 

who are not getting money when their music is being played on the 

radio. 

So all of a sudden I have given a lot of thought to this whole 

issue of intellectual property; and the value of the new and, in 

some cases, yet-to-be-invented energy technologies to both developed and developing nations is immense. Most of the technologies 

that we are going to depend on have yet to be invented. So I look 

forward to this hearing. 

There are some issues raised by Midwest Research Institute in 

the Fifth Congressional District which you may or may not be familiar with which I would like to lift up as we continue this hearing today. 

Thank you, Mr. Chairman and the ranking member, for this 

hearing. 

The CHAIRMAN. I thank the gentleman. 

[The prepared statement of Mr. Salazar follows:] 

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The CHAIRMAN. We will now turn to our panel. 

STATEMENTS OF GOVI RAO, CHAIRMAN, LIGHTING SCIENCE 

GROUP CORPORATION; ROBERT T. NELSEN, CO-FOUNDER 

AND MANAGING DIRECTOR, ARCH VENTURE PARTNERS; 

JENNIFER HAVERKAMP, MANAGING DIRECTOR FOR INTERNATIONAL POLICY AND NEGOTIATIONS, ENVIRONMENTAL 

DEFENSE FUND; AND MARK ESPER, EXECUTIVE VICE PRESIDENT, GLOBAL INTELLECTUAL PROPERTY CENTER, U.S. 

CHAMBER OF COMMERCE 

The CHAIRMAN. Our first witness today is Mr. Govi Rao, who is 

the chairman of Lighting Science Group Corporation, a leading digital lighting solutions company. He is also partner of Pegasus Capital Advisors, a private equity fund manager that is also pursuing 

opportunities for sustainable business solutions. 

He came back from his business trip to Bahrain yesterday night 

in order to testify in front of us today. 

We thank you so much, sir, for being here. Please begin when 

you are ready. 

STATEMENT OF GOVI RAO 

Mr. RAO. Good morning, Mr. Chairman, Ranking Member Sensenbrenner, and members of the committee. Thank you for the opportunity to testify before you today. This is my first such event. 

Mr. Chairman, as you mentioned, I am chairman of Lighting 

Science Group Corporation. We design and develop cutting-edge 

lighting products. And when I see lighting products like here in 

this room, what tickles me is that we still use mercury to do that, 

and there is a way to do that without mercury. Actually, that is 

what we do, is manufacture LED light bulbs which are innovative. 

We have manufacturing operations in New Jersey, Florida, and 

California. We would love to have operations in the rest of the 

country as well. 

This hearing to me actually has a couple of connotations. At the 

end of the day, if it is IP or innovation, without the opportunity to 

commercialize any of this, it really doesn’t matter. So I am going 

to be talking about the commercialization aspect of it. 

Yes, I did come back from Bahrain last night, so I am not sure 

what my body clock says, but I will try to survive the next couple 

of hours here. 

I am also a partner at Pegasus Sustainable Century Merchant 

Bank that we launched this year. The interesting story of Lighting 

Sciences, we brought together—‘‘we’’ as in Pegasus Capital— 

brought together four small, innovative companies in the U.S.—actually three small, innovative companies in the U.S. and one in Europe. Small, not large enough to have global access, but very innovative and very entrepreneurial: one in California, one in Florida, 

and one in New Jersey. We have given them the ability to actually 

be able to provide their technology to the rest of the world by building scale in both manufacturing and R&D. 

The three questions that were posed to me for today’s testimony 

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rain. And then IPR, is it a barrier or a boost? And I have my personal opinion about that. And also to see, in the context of the upcoming negotiations, what my hopes and worries are. So I am going 

to address the three of them today. 

My experience in the last few years in Lighting Science—and 2 

years especially in building this company—has been extremely 

powerful in two ways. One is seeking opportunities. We look at this 

from a protectionist approach when it comes to intellectual property. However, we also forget that countries mentioned—Ranking 

Member Sensenbrenner mentioned China and India specifically, 

but if you take a look at Brazil, Russia, China, India, the Middle 

East, they are recognizing that their gap between their energy requirements today and energy production today is significant and is 

growing. So they are actually being very aggressive in coming up 

with new ways of meeting that demand, both on the energy generation side, but, more importantly, they have also started very aggressively putting a cap on how to use the energy on the demand 

side. That is a powerful thing. I will spend some time on that 

today. 

While we have new technologies that are coming on stream for 

generation, I believe there is a tremendous amount of technologies 

here in this country already existing to mitigate the demand. We 

are not doing much about them, and I would like to spend some 

time on that. 

This is a big paradigm for us, bigger than anything we have seen 

before. So whether it is our road to electricity or landing on the 

moon or we are talking about the Internet, any of these things, all 

of these things, pale in comparison to what we have in terms of climate change. We look at this from a geographical perspective in intellectual property, but I believe we have to change our paradigm 

and look at this as a global activity. 

Let me give you an example of my 3 days in Bahrain in the Middle East over the last few days. 

The opportunities there on the demand side of energy are absolutely fantastic. They are requesting us to help them curtail how 

they use energy, whether it is through controls or whether it is 

through LED lighting or whether it is digital motor control. There 

is demand. They know they will have to get there one way or the 

other. 

I made a proposal here in the executive summary which is very, 

very simple. There is an urgent need to first act as a global community; and we have to start breaking down the barriers, the geographic barriers that we have built. The opportunities in the Middle East and Asia and China and especially in India are 

humongous and phenomenal. The technologies we have already. If 

we do not get there and actually make these technologies have the 

day-to-day commercialization, then we will fall behind in leadership in the commercial world, let alone the technologies base. 

The markets are created locally. We just heard China is urging 

buy China, buy local. So make local, buy local. We have to be there 

with our technology. So I am not saying give away the technology. 

I think there is a way of establishing leadership, and I have made 

a proposal and would love to answer questions about that in terms 

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of creating an exchange for IP where innovators get rewarded and 

not just taken for granted. 

Thank you, Mr. Chairman. 

[The statement of Mr. Rao follows:] 

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The CHAIRMAN. We appreciate that, Mr. Rao. We will have plenty of time to ask you questions. 

Our next witness today is Mr. Robert Nelsen, co-founder and 

managing director for ARCH Venture Partners. His company has 

significant experience in the early sourcing, financing, and development of emerging technology companies. 

As a part of ARCH Venture Partners, Mr. Nelsen has contributed 

to the development of over 130 companies, including leaders in the 

fields of solar and biofuels. These companies hold over 1,200 U.S. 

patents and patent applications. 

We thank you for joining us today, Mr. Nelsen. 

STATEMENT OF ROBERT T. NELSEN 

Mr. NELSEN. Good morning. Thank you, Chairman Markey and 

Ranking Member Sensenbrenner. 

My name is Robert Nelsen, and I am the co-founder and managing director of ARCH Venture Partners. ARCH has spun more 

companies out of U.S. universities and national laboratories than 

any other venture capital firm. I have been involved in founding 30 

companies over 23 years, including companies that are the standard of care in breast imaging, the leader in K–6 mathematics, the 

leading genomics company, and Sapphire Energy, the leader in 

algae biofuels. 

Please for a moment imagine a world with oil made here in the 

U.S.A. with just CO2 and sunlight on desert land powering conventional cars and jets. Imagine a world where solar energy costs 6 to 

8 cents a kilowatt hour with no subsidy. That time is now. Those 

technologies exist today, and that innovation is happening in our 

research universities and labs and in start-ups, not in big companies. Big companies don’t do that anymore, and they don’t take the 

risks. 

This bottle of algae oil from Sapphire Energy has 200 patents behind it and $100 million of private capital just to start. It will compete with Exxon and the Middle East and China. Sapphire has a 

huge lead now because of U.S. innovation and patents, and we are 

hiring hundreds of people in New Mexico and California. 

Without those patents, no money would come, no plants, no jobs. 

With a strong world patent system and the right voluntary incentives for global cooperation, we can use this green crude to make 

poor countries oil exporters; and we want to do that. 

I believe the only way to get to energy independence and solve 

global warming is through technology. Four to five inventions in 

the next one to ten years will change everything: algae biofuels at 

scale, solar that competes on cost, new batteries, new lighting with 

10× less electricity consumption. It will happen only in the U.S. Almost all of the major breakthroughs in energy are happening here, 

not just 50 percent of the patents but almost all of the major breakthroughs only because of strong IP protection, only because of huge 

private venture capital investments that follow Federal research. 

Now imagine a world where we allow Big Oil to run over the 

innovators because of weakened patent laws and weakened enforcement, where we accidentally harm our own clean industries by 

using compulsory licensing instead of incentives, where we increase 

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taxes on investors who create new companies, jobs, and solve our 

policy goals, like reducing carbon. That could be our trajectory. 

The light at the end of the tunnel is this committee and others 

who are saying, wait a minute, policy goals actually matter. We 

need to support and reward the innovators. We need funding support for scale-up, and we need support in other committees of Congress so that we do not inadvertently and accidentally hurt energy 

innovation. We need the right policies and incentives for global cooperation so we can deploy our solutions rapidly to the world, while 

still protecting jobs at home. We may even need something like a 

World Green Bank to help fund the deployment of green technologies in developing countries. 

Our greatest global competitive advantage in the next decade is 

energy innovation. Regardless of your position on global warming, 

we will lead the world in innovation, and we will become more secure as a result. Venture capital investment in energy is solely dependent on our patent system and protection of intellectual property. Without that investment, we all lose. Without a healthy venture capital environment, our policies will fail. With policies that 

encourage that investment, we are more secure, more prosperous, 

and we will have a greener and cleaner environment for the benefit 

of the global community. 

Thank you. 

[The statement of Mr. Nelsen follows:] 

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The CHAIRMAN. Thank you, sir. 

Our next witness is Ms. Jennifer Haverkamp, who is managing 

director for international policy and negotiations at the Environmental Defense Fund. 

Previously, Ms. Haverkamp served for 8 years as the Assistant 

U.S. Trade Representative, where she was responsible for reconciling U.S. trade policy and environmental policy. She has taught 

international environmental law at Johns Hopkins University; and 

we welcome you here, Ms. Haverkamp. 

STATEMENT OF JENNIFER HAVERKAMP 

Ms. HAVERKAMP. Thank you very much. 

Good morning, Mr. Chairman and members of the committee. It 

is an honor to be with you here today. 

Here is my message: Concerns about intellectual property rules 

are solvable problems. In fact, a strong climate policy will lead to 

a blossoming of new intellectual property. 

In my statement I will make three points. 

Point one, the most important driver of U.S. technology development and U.S. competitiveness is a strong domestic climate policy. 

I know this is a hearing about intellectual property rights, but really I think what we are talking about is our economic competitiveness, our concern that sharing our own clean tech overseas will let 

economic competitors get ahead by stealing our secrets. 

The truth is they don’t need to steal our ideas to outcompete us 

in the new energy economy. They can simply seize the opportunity 

first; and Europe, Japan, and others are racing ahead right now 

when it comes to new carbon technologies. 

How do we get back in the game? By putting a cap on greenhouse gas emissions, as this House has moved to do. That will create an enormous domestic market for low-carbon technology. And 

the alternative is to sit tight and watch our foreign competitors 

take a commanding lead in the new energy economy, and that 

would be a terrible mistake. 

Think about this: China’s seventh richest man, Shi Zhengrong, 

is worth $1.43 billion and is a low-carbon solar entrepreneur. And, 

during 2008, China became the largest solar panel producer in the 

world, with 95 percent of its production destined for export. 

I brought one graphic which my colleague will post there. The 

chart reflects the geographic distribution of patents around the 

world. And, as Congresswoman Blackburn noted, the circle on the 

left, the green half of the circle, is U.S. patents from the years 2002 

through 2008. We lead the world in clean energy patents, but we 

have a much smaller share of production, only 9 percent in 2005 

for solar. The problem here isn’t theft of our IP; it is that we don’t 

have the right national policies. 

Of course, where valid concerns about IP exist, they must be addressed. But we are not going to build a clean energy economy just 

by having a lot of pieces of paper from the Patent Office. We need 

factories and installers, and we get that by putting a cap on carbon. 

Point two, in the U.N. climate negotiations, intellectual property 

discussions have so far displayed strong rhetoric that limited analytical basis. IP rights are becoming a flash point in the U.N. cliWReier-Aviles on DSKGBLS3C1PROD with HEARING

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mate negotiations, where IP is one part of the broader issue of tech 

transfer. 

Over the years, developing countries have been promised and 

have had high hopes for tech transfer, but they have mostly been 

disappointed. As others have noted, the parties to the international 

negotiations hold sharply divergent perspectives on IPR. Many developing countries argue that IPR restricts their access to climatefriendly technology and seeks special treatment and relaxing of the 

rules. They see the situation as analogous to life-saving medications like those for HIV and AIDS. 

But there are big differences between pharmaceuticals and lowcarbon technologies. Unlike pharmaceuticals, many of the tools necessary to reduce carbon emissions and adapt to a warming planet 

are not leading-edge, unique solutions. They are existing technologies, unprotected by patents even in the developed world. 

Consider three main ways of emissions reductions: The first, energy efficiency, typically involves things that don’t require IP licenses: putting up insulation, caulking air holes, installing more efficient windows, appliances, that sort of thing. 

The second, clean energy production, likewise does not appear to 

be significantly hemmed in by patent protection. Many companies 

in different countries compete to offer renewable energy equipment. 

In wind, for instance, there are at least 20 different firms scattered 

in many countries competing to sell wind turbines. When a technology depends crucially on a single patent, such as a drug to treat 

HIV and AIDS, this doesn’t happen. 

Finally, consider a third way, sequestering carbon in farms and 

forests. To our knowledge, there are no exclusive rights, for example, in planting more trees, flooding rice patties less often, or using 

less fertilizer. 

It is also important to remember that getting a patent, unlike 

copyrights, requires a time-consuming and often costly application 

process in each individual country. Thus, unless an inventor has 

obtained a patent in a particular country, he or she won’t have any 

patent rights to enforce there. 

For these reasons, it is not clear whether there are enough IPR 

problems for climate-friendly technologies to support significant 

modifications or exceptions to the rules. 

It is also important to keep in mind when evaluating the developing countries’ proposals in the U.N. negotiations that countries 

are in the midst of what has finally ripened into an actual negotiation, with parties ramping up their rhetoric and staking out strong 

positions in anticipation of future compromise. 

Point three, we need to be vigilant for emerging problems from 

either side of the issue, potential infringement of IPR rights or potential IPR barriers to technology access. As I have noted, the case 

remains to be made in favor of climate-specific modifications to the 

rules. The urgency of the climate problem demands, however, that 

climate-friendly technologies be widely available and that breakthrough innovations be quickly and widely disseminated. Accordingly, we must continue to monitor the situation and respond swiftly if IPR rules are found to be blocking effective tech transfer. But, 

should that happen, the fora that specialize in IPR rules, the World 

Intellectual Property Organization and the TRIPS agreement, apWReier-Aviles on DSKGBLS3C1PROD with HEARING

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pear better positioned than the U.N. climate talks to address that 

issue. 

In closing, cooperative research and development can play a crucial supporting role in tech transfer; and the recently announced 

U.S.-China jointly funded center for CCS research is a good example of that. It helps set the stage for constructive U.N. negotiations 

toward the end that we must achieve, a global deal to reduce 

greenhouse gases from all major sources. 

[The statement of Ms. Haverkamp follows:] 

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The CHAIRMAN. Thank you, Ms. Haverkamp, very much. 

Our final witness is Dr. Mark Esper, executive vice president of 

the Global Intellectual Property Center and vice president of the 

Europe and Eurasia Department of the U.S. of Chamber of Commerce. Previously, Dr. Esper worked as a senior scholar at the National Institute for Public Policy. He also served as executive vice 

president of the Aerospace Industry Association of America. 

Thank you, Dr. Esper, for joining us this morning. We look forward to your testimony. 

STATEMENT OF MARK ESPER 

Mr. ESPER. Chairman Markey, Ranking Member Sensenbrenner, 

members of the committee, I appreciate the opportunity to testify 

today on behalf of the Chamber of Commerce Global Intellectual 

Property Center and its members. 

The Global IP Center and its members believe that strong intellectual property rights are integral to driving the innovation and 

creativity necessary to create jobs, save lives, advance economic 

growth and development around the world, and generate breakthrough solutions to global challenges such as climate change. 

Our Nation’s Founders recognized the link between strong IP 

rights and innovation more than 200 years ago and explicitly gave 

Congress the power to protect IP rights in the constitution. As a 

result, America has led the world in innovation for generations. Today, the United States IP is worth between $5 and $5.5 trillion. IP accounts for more than half of all U.S. exports, helping 

drive 40 percent of the United States economic growth; and, as of 

2008, IP-intensive industries employed more than 18 million Americans. But beyond driving job creating and economic growth, strong 

IP rights have created a secure framework for investment in research that led to solving some of the world’s most difficult problems, from disease and famine to water scarcity and energy security, just to name a few. 

In addition to protecting and incentivizing inventors, strong IP 

rights are also integral to promoting technology deployment and 

diffusion by providing a clear legal framework by which companies 

can transact business. 

Despite these facts, threats to innovation and IP rights exist 

around the globe. In an effort to promote domestic industries or appeal to narrow political interests, some governments are actively 

engaged in attempts to weaken the current IP system. 

The United Nations Framework Convention on Climate Change 

is the latest front where some are attempting to portray IP rights 

as a barrier to solving climate change. The GIPC believes these 

critics have once again turned reality on its head. Robust IP rights 

are not an obstacle, as some allege, but instead play a fundamental 

role in encouraging innovative solutions to climate change mitigation and adaptation. 

IP protection also helps facilitate tech transfer by providing companies a commercial incentive to engage in foreign direct investment, joint ventures, co-production, cooperative research endeavors, 

and licensing agreements with local partners. 

There now is a clear commitment by the developing world to address global warming through some form of binding international 

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agreement. As either a negotiating tactic to block any international 

agreement or condition that will be used to advance their own economic development and technological prowess, China, India, and 

other developing nations are using the issue of tech transfer as a 

major lever in current U.N. negotiations. As a result, among the 

options included within the current U.N. negotiating draft is language related to IPR as compulsory licensing, patent exclusions, 

and other exceptions for green technologies. 

Incorporating any of these proposals into the final U.N. agreement would not only have a negative impact on the development 

and diffusion of climate change mitigation and adaptation technologies but would also put American workers and the U.S. economy at a competitive disadvantage. 

Some countries claim that IP rights are a major barrier to the 

diffusion of technology. Such claims are quite misleading. To begin, 

IP rights cannot be a barrier to tech transfer if the patents are not 

protected in the first place, which is often the case in many leastdeveloped countries. 

Ironically, one of the real barriers to tech diffusion is not strong 

IP rights but the lack of them. Indeed, a report commissioned recently by the European Commission states that ‘‘U.S. multinational 

companies are more active in engaging and transferring intangible 

assets to their own affiliates in the country if the country has 

strengthened its IP legislation.’’ 

Another major obstacle to tech transfer is a country’s absorptive 

capacity, meaning a country’s ability to not only receive the technology but then have the various means, from physical to human 

capital, to deploy and employ it effectively. 

Lack of access to capital in domestic and international markets 

is another barrier to tech transfer. Other obstacles to tech transfer 

are often self-imposed through tariff and non-tariff barriers. 

A 2008 report by the OECD stated that Brazil, Russia, India, 

and China have ‘‘significant barriers to trade in carbon abatement 

technology,’’ often imposing tariffs quoted above 10 percent on 

these technologies. 

A recent report by the U.S. Chamber of Commerce stated that 

‘‘many companies impose tariffs of up to 70 percent on climatefriendly goods and services, impeding access to cutting-edge technologies.’’ 

Given the real and very serious obstacle to tech transfer, a number of remedies are readily apparent. The U.S. could take a number 

of actions from, for example, urging developing countries to 

strengthen their IP laws and enforcement, working with countries 

in the developing world to improve their absorptive capacity, and 

working with our trading partners and others in the developing 

world to remove all tariff and nontariff barriers to trade. 

These are just a few ideas. I included more in my written testimony, and we can discuss additional ones later. 

But the fact is that technology development and deployment and 

diffusion cannot be mandated. It is a long-term process that occurs 

largely and most effectively within the private sector along voluntary, commercially viable, not de-compliant terms. 

The Global IP Center applauds the House of Representatives and 

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tection is a priority within the UNFCCC negotiations, particularly 

Ranking Member Sensenbrenner and Representatives Blackburn, 

Larson, and Kirk. As a result of these efforts, there are currently 

three House-passed bills containing provisions aimed at protecting 

IP for green technologies. 

While the Chamber views these provisions as positive, enacting 

them does not guarantee that IP rights will be protected in Copenhagen, nor does it foreclose the likelihood that other nations may, 

down the road, seek to use a narrowly tailored exception in the current WTO agreement on trade-related aspects of intellectual property rights to expropriate IP-protected American innovations. As 

such, we believe it is critical that Congress continue to send the administration and our negotiating partners clear and forceful signals 

that IP rights is not an area where the United States is willing to 

make concessions in Copenhagen. 

Let me wrap up by saying that reduced global carbon emissions 

is a major challenge that will require many new technologies and 

unprecedented cooperation among the world’s nations to achieve. 

At a time when job creation, economic growth, and problem solving 

are paramount, it is important more than ever to protect an IPbased incentive system that has worked extremely well for centuries and driving innovation, developing solutions, and deploying 

those technologies as broadly as possible. 

The Congress has taken a number of positive, constructive steps 

in this direction, but more can and should be done if we are to be 

successful at the end of the day. 

Thank you. 

[The statement of Mr. Esper follows:] 

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The CHAIRMAN. Thank you, Dr. Esper, very much. 

I now recognize the gentleman from Wisconsin, Mr. Sensenbrenner. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

In my opening statement I refer to the current U.N. negotiating 

text at the Bonn meeting next month, including proposals to ‘‘exclude from passing developing countries environmentally sound 

technologies to adapt to or mitigate climate change.’’ 

A second to require ‘‘compulsory licensing for environmentally 

safe and sound technologies.’’ 

A third, to ensure ‘‘access to intellectual property protected technologies and associated know-how in developing countries on nonexclusive royalty free terms.’’ 

Now, obviously, this goes directly opposite to what everybody has 

said here. 

What would be your recommendation to Mr. Stern and the U.S. 

negotiating team when they go to Bonn next month on how to deal 

with this issue, aside from saying what is in the text is a nonstarter? 

I open it up to anybody who wishes to take a crack at it. 

Mr. Nelsen. 

Mr. NELSEN. I will take a shot. 

I do think you have to have an alternative other than just saying 

no. 

One of the things I was looking at as a model was something like 

the Asian Development Bank, some possible private or private-public sector incentive system, essentially. So for a developing country, 

if there is a breakthrough technology, that there is some way, 

maybe modeled after the Green Bank here, that would incentivize 

U.S.—primarily U.S.-breakthrough technologies to go to developing 

countries and possibly loan guarantees or some other way that sort 

of entices me, instead of going to another developed country to deploy my technologies, to deploy in developing countries still with 

IPR protections. I think with the overarching goal being that the 

technologies are still proprietary and protected, but there are incentives to deploy versus disincentives. 

Personally, I think it is going to be very hard because of the 

amount of dollars that are going to be invested in these technologies to deploy billions and billions. If there is not some kind of 

intellectual property rights there, people won’t do the investment 

in the developing country, so we will have exactly the opposite effect that the developing countries are thinking it will have, some 

incentive structure. 

Mr. SENSENBRENNER. Mr. Nelsen, I appreciate that. The message 

that I got out of our recent trip to China is either, quote, give us 

a compulsory license or, if you won’t do that, we will just steal the 

technology anyhow. Either alternative, one which is legal and one 

which is not, would mean that the actual manufacture of the technologies that were developed as a result of American innovation 

would not be made by American workers for use in Third World 

countries. 

How do we solve that problem? Because we want to develop jobs 

here in this industry; and with either the compulsory license or 

what we heard in China, we will be developing the technologies, 

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but the Chinese will be using their workers and paying them slave 

labor wages, so they will end up monopolizing the market. 

Mr. NELSEN. I think we can do both. I think there are plenty of 

incentives that are being created here at home to be able to deploy 

green technologies. I think the Green Bank is one way of kind of 

getting some incentives for things to stay here. 

So, at least with this oil, we are going to start in Texas and 

Oklahoma and New Mexico and other places. But it isn’t necessarily a loss for us if China makes this oil under the right construct. If China is making domestic oil, that means they are probably interfering in less things outside of China and Africa and 

other places. It might not be a bad thing. 

I personally think, with China, it is a different case than some 

of the other developing countries. I think it needs to be dealt with 

at a high level, probably in some sort of SED construct or some 

specific government-to-government relationships where IPR is really addressed at an extremely high level. 

When we are making our business decisions about China, we are 

waiting. And we are waiting for government help and we are waiting probably to try to get China to invest some of their own foreign 

reserve in things like this so that they feel invested and that we 

feel protected. 

Mr. SENSENBRENNER. That is a big problem. Because if they can 

get it free, why would they invest their money in that rather than 

something else? 

I think I have made my point. My time is up. Thank you, Mr. 

Chairman. 

The CHAIRMAN. Mr. Inslee. 

Mr. INSLEE. This is a little bit off topic, but we had discussion 

yesterday about some multiple technologies. There was a question 

asked yesterday about the relative prospects of two paths for transportation fuels, one of a solar-powered, electrical-powered vehicle 

transportation system, and an alternative or adjunct path of a 

solar-powered photosynthetic biofuels path to a transportation system. 

The gentleman who was talking was comparing the relative efficiencies of photosynthesis to photovoltaic or concentrated solar systems. I wonder if you want to comment on your view how we 

should look at those two potential paths, Mr. Nelsen. 

Mr. NELSEN. Just real briefly. I think there are going to be multiple solutions. So they are not substitutes for each other. But I 

think people often confuse electricity with transportation fuels. So 

if you are comparing a transportation fuel to something, you need 

to compare it to a battery that stores electricity. You can’t compare 

solar photovoltaics to a transportation fuel. Basically, you have to 

say it is a gallon of gas compared to a battery. And, right now, a 

gallon of gas is 200 times more dense than the best battery. So if 

you have a battery that equals a gallon of gas and it was a 

Duracell battery, it would be 9 feet high. So far, there isn’t anything that replaces most transportation fuels. 

Mr. INSLEE. Thank you. 

Mr. Rao, when we were in Hong Kong or north of Hong Kong, 

we saw an American company, CERES, doing work on LED lighting elements; and, as I understand it, they intend to do some manWReier-Aviles on DSKGBLS3C1PROD with HEARING

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ufacturing in China. What is your current view of the relationship 

of your intellectual property in a China context? What do you view 

the current status is? How confident would you be of manufacturing in China or allowing that intellectual property to be available? 

Mr. RAO. With respect to the LED technology, sir, we have been 

waiting for that particular reason, because our confidence level 

wasn’t too high. However, we have seen technologies grow in China 

and take advantage of the massive local market. At the end of the 

day, they are able to invest in manufacturing in China if they are 

able to create the market in China. We are finding low-cost options 

for LED technology coming from China, and we are beginning to 

have conversations with people to actually either cross-license or 

work together. 

As Mr. Nelsen mentioned, most of us here in the U.S. are in a 

wait-and-see approach as to what happens in places like China. In 

the meantime, however, their markets are growing at a very rapid 

pace. They are not waiting for people like us to come in. They are 

getting it. They are taking it one way or the other and will continue doing that, whether it is through their own schools and universities or it is through partnerships. So that is why I brought up 

the sense of urgency for us to move forward. 

If we don’t take the action and create some kind of a mechanism 

on the commercial side to take advantage of our technologies and 

IP, then I believe we will be left behind, which is one of the reasons 

we are jumping ahead and having those conversations. 

Are we very confident of protecting our IP in China? No. But is 

that the reason not to do something? I don’t believe so either. I am 

not sure of the exact answer, but we will have to get out there and 

start putting our technology out there so it leads the world. 

Most of the core technologies in demand side, whether LED lighting or not, is here today to lower energy consumption. As American 

enterprise, if we are able to get out there and make that lead and 

have other countries and companies follow, I think we will continue 

to stay in the leadership. 

Mr. INSLEE. So do you look at yourself as sort of between a rock 

and a hard place? If you wait and allow other companies to develop 

these markets in China, you are left at the starting gate. If you 

move to China now, you could lose your intellectual property. Is 

that the conundrum you are in? 

Mr. RAO. That is it exactly. So people look for alternatives, 

whether it is Thailand or Indonesia, where there is more of a perceived protection of IP. I am not sure if it is true or not. There is 

less of a flow. Or what we do is we keep gen one products here in 

the U.S. and maybe older technology we take it to other parts of 

the world so you don’t lose your current technology. 

The other thing about being between a rock and a hard place, sir, 

is the fact that if we are able to create markets here locally, we 

can stimulate innovation at a much more rapid rate. That is one 

thing that is keeping us behind. A couple of us mentioned here we 

are slow to create markets in energy and climate-related technologies here in the U.S. That will be our number one challenge. 

If we don’t do that, we will be left behind. China and India and 

the Middle East are doing that today. 

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Mr. INSLEE. We have a little bill that we hope will become law 

in the fall that will help in that regard. 

Thank you very much. 

The CHAIRMAN. The Chair recognizes the gentleman from Missouri, Mr. Cleaver. 

Mr. CLEAVER. Mr. Nelsen, are you familiar with Midwest Research Institute? 

Mr. NELSEN. Just generally. 

Mr. CLEAVER. The Midwest Research Institute, MRI, has a division called Solar Tech; and it serves as a neutral place where companies, research organizations, or utilities can collaborate on or 

come and challenge and conduct proprietary research necessary to 

be successful. I am wondering whether or not you think it would 

be feasible for us in some future legislation to award incentives to 

companies that create neutral places as a part of their U.S. marketing strategy? I mean, where the innovators can come to make 

sure that there is a neutral party to kind of manage, oversee, negotiate, to prevent thievery? 

Mr. NELSEN. I think that is a good idea in the U.S. 

When you talk about exporting ideas like that globally, I think 

it is a great idea to have applications development or, as Ms. 

Haverkamp mentioned, a place, a joint effort we are doing in 

China, and there are some things in Europe. There is a lot of interesting ways we can think about ideas like that on a global basis 

focused on applications. 

My point earlier was that most of the big breakthroughs are still 

going to happen in the U.S. So we have to do two things. We have 

to protect the big breakthroughs, and we have to develop the applications. 

I think when you talk about these joint research institutes and 

potential neutral ground, those are better for the applications than 

they are for the breakthroughs. Because no matter what you do in 

foreign countries, you won’t be able to replicate the $1 trillion or 

$2 trillion investment the U.S. has in our research infrastructure 

that is pretty much not duplicatable anywhere else in the world. 

Mr. CLEAVER. Thank you. 

Ms. Haverkamp, you mentioned the benefits of including international allowances and offsets in the Waxman-Markey climate 

bill, which we proudly passed over here in the House. And if we 

could figure out a way to eliminate the Senate constitutionally, I 

think we could make a lot of progress, but that is just a personal 

opinion. But you also mention that the Kyoto Protocol international 

offset program, the clean development mechanism, has not lived up 

to expectations. 

What can you share with this committee that might improve our 

international offset program before the final passage of our Waxman-Markey bill? 

Ms. HAVERKAMP. Thank you for the question. I think what is especially important is that the international offsets that are allowed 

to be used by U.S. companies satisfy scientific requirements for 

their environmental integrity, and I think the bill proposes a process for that happening. There are some kinds of offsets, like the reductions in deforestation from tropical forest countries, that you 

can be sure are keeping carbon out of the atmosphere, and the bill 

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in a very good way creates a lot of space for deforestation credits 

to come into the system. 

With respect to emissions reductions from projects in developing 

countries along the lines of the clean development mechanism, I 

think there are a couple of things that should happen. One is to 

make these reductions happen at a greater scale is to move to more 

broader what are called sectoral crediting, where you are trying to 

achieve reductions across an entire industrial sector rather than a 

particular facility. 

The other thing that I think the bill does which I applaud is that 

while preserving the clean development mechanism projects for the 

smaller, poorer countries, it has a mechanism for the largest 

emitters graduating out of the ability to sell their credits into our 

market. And I think that is especially important for the atmosphere, because the major emitting developing countries need to 

move as soon as they can toward real emissions reductions. And 

CDM projects are, frankly, shifting emissions from one part of the 

world to another rather than an overall reduction globally in emissions. 

Thank you. 

Mr. CLEAVER. Thank you. 

Mr. Esper, do you think that further nation-to-nation collaboration, such as the U.S. and China are doing on carbon capture and 

sequestration, or promises for future collaboration will significantly 

help negotiations with developing nations at Copenhagen? 

Mr. ESPER. Well, I think it is important that we continue to engage China on this issue. But for the purposes of intellectual property, I think we do need to be very clear up front with the Chinese—and in some ways they have claimed leadership of the G–77 

bloc—to make clear that IPRs are off the table with regard to a climate change agreement, because at the end of the day, as several 

of us noted, and the chairman and the ranking member have noted, 

if we don’t protect the intellectual property rights, then we won’t 

draw the innovation that is going to get us to the solutions. 

And so I think it is critical that we continue to engage the Chinese, but be very clear and forceful up front that IP isn’t on the 

table when it comes to addressing climate change. 

Mr. CLEAVER. All right. Thank you, Mr. Chair. 

The CHAIRMAN. Great. We thank the gentleman. 

Mr. Rao, in your testimony you point to the tremendous business 

opportunities across the world for clean technology. Could you tell 

us in more detail about the experiences you personally had meeting 

this demand with your products? 

Mr. RAO. Sure. Chairman, thank you for the question. Specifically I will talk about the Middle East, but I will also expand that 

to Southeast Asia and China where we have been having discussions. This is fresh in my mind, so I can talk about that. 

The CHAIRMAN. Tell us about the barriers that you have encountered, please. 

Mr. RAO. Absolutely. 

This pertains specifically to energy in the aspect of demand containment, so demand-side management in terms of lighting, digital 

lighting, so LED lighting and controls. There are opportunities in 

these countries where they have recognized that controlling their 

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use of energy is going to be a lot faster than just adopting energygeneration technologies. As an example, in the Middle East using 

solar photovoltaic technology is not going to be practical because of 

dust settling into solar panels. So they have tried it. You know, we 

blindly believe that there is a lot of sun in the Middle East, so 

solar would be great, while actually practically on the ground it 

does not seem to be all that fine. 

The CHAIRMAN. Would that be the same problem in the Mojave 

Desert in the United States; dust would settle in, and, as a result, 

that that is a false promise as well? 

Mr. RAO. I am not sure if I am qualified to technically answer 

the question without a little bit more research, Chairman, but I 

will tell you this: If it is dust with moisture, if the humidity content is high in the Mojave Desert, which I believe it is not, at least 

for most of the year, that becomes an issue, because the dust with 

humidity settles in and cakes on these panels. That is actually putting a barrier between you and the sun rays and the actual photovoltaic cells. 

The CHAIRMAN. So we are lucky there is no humidity in the Mojave Desert, so as a result we can become the solar giant because 

of that. And all across the Middle East, no matter whether it is 100 

degrees a day and the sun is out every single day, that solar is not 

in their future, is that what you are saying, because of the humidity that accompanies the dust and the sun in the Middle East? 

Mr. RAO. For the moment, Mr. Chairman, that is the reality as 

they have tried and tested. However, I am hoping—— 

The CHAIRMAN. Wow. 

Mr. RAO. Go ahead. 

The CHAIRMAN. No, I am just saying, wow, I did not know how 

really up the creek the Middle Eastern countries are because of 

their humidity accompanying there. I never knew that before. 

Mr. RAO. And they are looking for solutions. So talk about technology and opportunity for innovation, if we can solve the problem 

of dust and humidity settling in. The same thing happens with outdoor LED lighting where the brightness of the fixtures are reduced 

by 40 to 50 percent because of the film of dust that gets in, caked 

in. So we are taking that on as a challenge to resolve those issues. 

That is on the energy side. 

On the control side in LED lighting, interior, I believe, there are 

tremendous opportunities. As an example, in built environments 

today, with technologies that exist here in the U.S. and elsewhere, 

we can reduce the energy usage by at least 40 percent without 

major infrastructure change. They recognize that, and they have 

asked us to help them with implementation of this technology. 

So there are specific examples. So if you talk about controls, 

what am I talking about specifically? Making built environments 

more intelligent that actually regulate the lighting, the HVAC, et 

cetera, based on ambient conditions of outside lighting as well as 

outside temperature. And very often we find in commercial buildings or in other places as well, the outside temperature is 110 degrees, but the inside temperature and air conditioning is ramped 

down to 65 degrees. And we have actually been in environments 

where you feel cold inside when it is 110 degrees outside. 

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The difference doesn’t have to be that much to provide comfort 

for us as human beings to being inside. So making it intelligent actually adds a tremendous amount of savings. That is something 

that we ought to be doing here in the U.S. And people outside the 

U.S. and the Middle East and Southeast Asia have recognized that 

as well. They are beginning to implement those technologies. 

The CHAIRMAN. Let me ask Mr. Nelsen a question. You talk 

about the U.S. Green Bank as a good idea to help to finance new 

green technologies, but you also pointed to the idea of a World 

Green Bank. Could you talk a little bit about how you would see 

that structured and how you would see the technology transfer 

occur in that kind of a context? 

Mr. NELSEN. I think the structure would be similar in the sense 

that it is really an incentive process. So if you have a developing 

area, they can essentially partner with private companies and then 

apply for funding from this entity, whether it was a private entity 

or public entity. Something like the Asian Development Bank 

would be a good example of something that exists outside of the 

U.S.-proposed Green Bank. So if I wanted to make a million-acre 

algae biofuels facility in a poor country in Africa, I would approach 

the country, and we would jointly apply to an entity that would 

help partially fund it; intellectual property rights being preserved, 

not actually transferring the technology to anybody, but kind of a 

joint effort that would have some public funding. 

And then with China I think it is a little bit different, so it needs 

to go in at probably a different level. And I actually think maybe 

the solution would be to have the Chinese put up some of their excess money into that kind of a structure so they feel invested. 

The CHAIRMAN. So when the Chinese say they don’t have any excess money, and, as a result, we should be giving them these technologies, what is our best answer to them about this debate over 

whether or not they have excess money? 

Mr. NELSEN. I sat on a panel recently with the person that is directing the social security fund in China and the other person that 

happens to be in charge of the China Investment Corporation, and 

they have a large amount of money. And I think that one of our 

challenges to China and one of the ways to solve this problem is 

to get them invested. I mean, if they are investing billions and billions of dollars in U.S. technology that is deployed in China, and 

intellectual property rights are preserved in a government-to-government relation, that actually might work, because it is less likely 

that they are going to want to steal the technology if they have invested huge amounts of money in it. 

The CHAIRMAN. Got it. Thank you. 

Mr. ESPER. Mr. Chairman, I was going so say, if I can add, I 

think China is a special case. And going back to the idea of the 

Green Bank, and the demand is that the developed countries would 

make contributions to the bank from which, as the example was 

pointed out, the developing countries could draw from. But I think 

putting the onus on the developed countries is only half of the 

equation. The other half is addressing the tariff and nontariff barriers. It doesn’t make much sense to contribute to the bank and 

allow companies or countries to draw from this, but then paying exorbitantly high tariff rates and confronting the other problems. 

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China is even more different, because in that case not only do 

you have the tariff issues and nontariff issues that you face, but 

in China we also note that the government has identified renewable energy as a strategic industry. So they have, in addition to 

tariff and nontariff barriers, other types of protectionist measures, 

whether it is local content requirements, IP issues, that are really 

aimed at improving their own economic competitiveness and their 

technological skills. So it is a special case that we really have to 

work on in particular if we are going to break down these barriers 

and get them to be a responsible player in addressing climate 

change. 

The CHAIRMAN. Thank you, Dr. Esper, very much. 

The gentleman from Washington State, Mr. Inslee. 

Mr. INSLEE. Thank you. 

Dr. Esper, could you talk about those tariff barriers right now, 

where they exist; the amounts; what, if anything, we do then about 

them; are there pockets of the worst offenders? 

Mr. ESPER. Well, we have some specific examples. I think I cite 

in my written testimony countries such as the Philippines, China, 

others, where you have tariff rates at least as high as 10 percent, 

in some cases higher. You have other types of nontariff barriers 

that could equal 300 percent in terms of a tariff equivalent. So it 

is a big challenge when countries put those types of obstacles in 

front of tech transfer. That is what we say when we, rather than 

talking about IP and how we do compulsory licensing or tech transfer in the UNFCCC context, we really need to not focus on the red 

herring and look at what the real obstacles are at the country-bycountry level and tackle those. 

Mr. INSLEE. Let us just take the Philippines, just because you 

have mentioned them. Have we made any significant efforts on 

those tariff barriers for IP use, so there is, like, a 10 percent. I 

mean, we are investing gazillions of dollars in security, training 

people in the Philippines. It is kind of hard to accept that tariff 

barrier against our sales to them of high-tech material and systems. Have we made any serious attempt there, for instance? 

Mr. ESPER. Well, that is a good question, and I don’t have the 

answer for it right now. I think it is part and parcel of the strategy 

we need to put forward in terms of addressing the tech-transfer 

issue of looking at these countries, looking at where they rank on 

the special 301 watch lists, and asking ourselves how do we talk 

to them and how do we engage them in a way that will get them 

to reduce these tariff barriers. What levers can we use either diplomatically, through financial assistance, foreign assistance, whatever the case may be, to get them to address these issues to comport with international IP laws and to strengthen our IP enforcement? 

Mr. INSLEE. Mr. Nelsen, you had an idea about the Green Banks, 

like the idea of maybe using a Green Bank in an international context. But you also suggested one solution is to have other companies be invested so they have got an investment in it where they 

benefit, if you will, from IP protection. 

Were those mutually inconsistent at all, that you know we are 

helping finance through Green Bank, but we are also expecting 

people to be personally invested? 

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Mr. NELSEN. I think you define it based on poor countries versus 

wealthier countries. So there are developing countries that have 

large foreign currency reserves; you know, China being the obvious. 

So I think China and India and maybe one or two other Asian 

countries are separate cases. And then you have issues like Africa 

and other places where basically there isn’t money, and so you 

need to probably have some kind of private-sector, public-sector 

matching, or similar, some quasi-public structure like the Asian 

Development Bank, where there is maybe—or maybe multiple different organizations coming together to do project finance that has 

some private matching. 

Mr. INSLEE. Just to share my story from China to show I am 

thinking on the lines you are is that when we were meeting with 

the Chinese officials and, the same line, with remarkable message 

discipline, everyone told us the same story in China, which is that 

they are a developing nation, we are a developing nation, we are 

a developing nation. And I was with one of the officials. I noted 

that in driving to the meeting with him, we had gone by two Gucci 

stores, a Prada store and a Ferrari dealership. And I noted that 

just that morning, the Chinese businessmen had bought a stake in 

the Cleveland Cavaliers. And I said that I thought China was a developing nation just as much as Yao Ming is a developing basketball player, so I kind of share your view in that regard. 

Mr. NELSEN. One of the things I have noted in my dealings with 

China has been that I think they are looking for the right technologies, just as we are. Once the green technologies that actually 

can compete on cost exist, I think they will absolutely invest their 

money in it. And so as you see solar come down, and as you see 

biofuels that are practical, it is the same process that we have 

here. I mean, they are going to be marginally impactful until they 

can compete on cost, and then I believe we will invest more, and 

I believe China actually will want to invest some of their foreign 

currency in those solutions. And that is probably actually a good 

thing for us in a lot of ways. But we are still going to need to go 

high maybe in an SED level for IP protection. 

Mr. INSLEE. Thank you. 

The CHAIRMAN. Mr. Rao, I really want to come back to this inability of the Middle East to produce any solar, because, as you 

know, it is necessitating us selling nuclear power plants to countries in the Middle East with uranium, plutonium and other nuclear bombmaking material, which is only going to escalate the tensions in the Middle East. And I am very afraid that as we send 

very expensive nuclear power plants to the Middle East, that we 

are only shortening the day that we have to send ever more troops 

over there as a government collapses that has one of these nuclear 

power plants. In the same way that in Iran and Iraq we are now 

facing that problem, it is almost inevitable that the same thing will 

occur in one of these other countries, a country that could otherwise generate electricity from solar. 

So here is what I am wondering, and everyone is gone here, so 

I am all alone as the Chairman, and I am just wondering, you 

know, we have this problem with rain that used to go on the windshields of American cars, and somebody came up with the idea of 

a windshield wiper that would just wipe off, basically. 

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And then somebody came up with a brilliant, brilliant idea. It 

was called the intermittent windshield wiper. It would just occur 

every 30 seconds or so, a big patent fight over that about 50 years 

ago in the United States. A guy got very rich winning this patent 

fight, a big, big fight. 

And it just seems to me that maybe someone can invent a way 

that intermittently the—since the very device that we are trying to 

protect generates electricity, it would seem that perhaps there 

would be a way to have an intermittent dust wiper, you know, wipe 

off the dust so that the electricity which is being generated by the 

thing that is being protected by the intermittent dust wiper would 

allow this country to be able to take advantage of their better natural resource rather than asking the United States to send them 

uranium and plutonium. 

Should I get a patent on my idea, Mr. Rao? And would this idea 

emanating from this Chair right now constitute constructive notice 

to all other entrepreneurs in the world that I have the idea first? 

And how much more complicated than that should it be to be able 

to figure this out? 

Mr. RAO. A couple of comments, Mr. Chairman. I think it is an 

excellent idea, and the only consolation is that you probably are repeating what happened at a workshop 3 days ago in Bahrain about 

finding alternatives for self-cleaning solar panels that actually can 

do the same thing. We did recognize the fact that there was a patent fight, and the discussion was we have to do more research on 

who holds the patent on intermittent wipers and how it can be applicable to solar panels. 

The CHAIRMAN. You actually had that conversation. 

Mr. RAO. Absolutely. 

The CHAIRMAN. No way. 

Mr. RAO. But there may be an extension. If you look at IP, so 

you will note that they actually had the conversation here in terms 

of actually bringing it, because we were looking for solutions. 

The CHAIRMAN. You know, there is a part of me that really from 

a nationalistic perspective that I thought maybe I shouldn’t share 

this idea with Bahrain and Saudi Arabia and other countries, 

maybe I should just keep it here so that we develop all these ideas, 

and that they not become the capital of solar, okay, because we 

now have them, because they don’t know about this, buying our nuclear power plants. And that is a good trade advantage for us. 

But maybe just out of—you know, and Ms. Haverkamp already 

pointed this out, and I think Mr. Nelsen as well—maybe there are 

other reasons we should share the intermittent dust wiper technology with these other countries so that they can capture the opportunities there. 

But I just think it sounds like an eminently solvable problem, 

and it also solves the problem of us sending uranium and petroleum to countries that could be subject to political instability over 

the next 50 years, which instability would then create real problems for us as well in the transfer of nuclear bomb-making material to Third World groups that many of these countries, as you 

know, are already subsidizing at least indirectly. 

So I just think the sooner we solve this problem—and I would 

like to work on this as an issue, because I think almost everyone 

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at this table really does believe that solar is the future, and it 

could become the single largest manufacturing sector in the history 

of the world. And I would just hate to see the countries with the 

most sun not being able to benefit from it because they don’t understand the intermittent windshield wiper technology better. 

Mr. RAO. Excellent. Thank you, Mr. Chairman. That is an excellent idea. In fact, I think what the folks in Bahrain and the Middle 

East are looking at is not the solar, it is just one option. It is one 

of several options. So, for example, they are exploring wind simultaneously as well, and they are also curtailing the use of energy 

itself. They are grossly negligent about how they use energy because it is so cheap. Now they are beginning to realize that. 

We will work on that. I really applaud you for taking that effort, 

and maybe there is an idea for another patent, maybe, if you continue thinking on it. 

The CHAIRMAN. Is this a patent in the control of the United 

States? Are you aware of that? Is the workshop, the 3-day workshop, on the intermittent dust removal technology, is that an 

American technology that they were discussing? 

Mr. RAO. The initial patents, I believe, we are doing some research on it. The workshop wasn’t on intermittent wipers, the 

workshop was on energy solutions as a whole. This is one aspect 

of it. So we have started doing research. It is about 48 hours since 

my last discussion on that, and I have been in a plane for 26 hours 

of those. So we will get that research as well. 

The CHAIRMAN. Thank you. 

A lot of times people say, well, you know, this is the equivalent 

of our putting a man on the moon. But in a lot of ways, that kind 

of overstates the case because we are talking about batteries, we 

are talking about, you know, incremental additions on already existing technologies with additional breakthroughs; kind of like in 

the chip industry how there is Moore’s law, and it just keeps improving every year or so. 

The same thing is true here with incremental new technology 

breakthroughs that keep improving by another 18 percent per year 

the efficiency of solar or wind or other technologies, which seems 

to be the curve that at least solar has been on since 1978. So that 

is the context in which I am thinking about these issues. 

Maybe you could, Ms. Haverkamp, talk a little bit about the difference between the HIV/AIDS patent protections and the clean energy patent protections as you see the differences in other countries 

around the world in terms of those technology-transfer issues. 

Ms. HAVERKAMP. Sure, my pleasure. I went into this in some 

more detail in my written testimony than I did orally, and I would 

recommend that people also look to that. But I think some of the 

most significant differences are that often in the pharmaceutical 

area to deal with a particular disease there may be just one fix 

that is developed, one drug that really works. There is a lot of effort to find the one thing, the silver bullet, if you will. And what 

people are fond of saying is that with respect to climate change, it 

is not going to be a silver bullet, it is going to be silver buckshot. 

And the examples that you see, say, in the solar area or the wind 

area, where there are lots of different companies with lots of different ways of addressing the problem of reducing emissions or 

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making the products more efficient, that is quite different from the 

medicine area. 

But I do think it is important, in thinking back to Representative 

Sensenbrenner’s question about the negotiations, there is a lot of 

baggage from the pharmaceuticals debate that countries bring to 

the climate debate. 

The CHAIRMAN. So what is that baggage? 

Ms. HAVERKAMP. I think it was a sense that in the pharmaceutical area, it was more a monopolistic situation with the few 

large companies that were making—they had to make incredible 

investments in the research to develop these products, but then 

there were significant financial benefits when you had that patent. 

And there was a fair amount of obvious human misery that could 

be avoided if the medicines could be made available more cheaply. 

And it was—this is getting into anecdotal information, but I 

think one of the stories that I remember being bandied about a lot 

was that when the patent was about to expire, a minor change to 

the product could extend the patent period again. So it was looking 

like it was companies going out of their way to preserve their market share and make it harder for generics to come on line. And I 

think in the area of human health that was seen by many developing countries as unacceptable. 

The good news is that in the Doha WTO Ministerial, the governments got together and came up with a decision about access to 

medicines that recognized that there were flexibilities in the TRIPS 

agreement, and in situations like this, they really ought to be used. 

The CHAIRMAN. So in the negotiations on international climate 

agreement, intellectual property is one of the four main pillars of 

the negotiation. Why is it important for the United States to be a 

leader in resolving these issues, in your opinion? 

Ms. HAVERKAMP. I would slightly amend your description of intellectual property as one of the four main pillars. One of the four 

main pillars is the transfer of technology, and intellectual property 

is one piece of that. The transfer of technology involves also the capacity building, the access to information, a whole suite of issues. 

And transfer of technology and addressing that is critical to getting 

an agreement in Copenhagen because it is, if you will, the developing country’s side of the deal that we need to make. We are 

wanting them to reduce their emissions; they are wanting the technology and financial assistance to be able to do that. And it is in 

our self-interest as the United States to come up with solutions in 

the tech-transfer area because, as many people have said, even if 

our emissions went to zero, if all the developed country emissions 

went to zero by 2050, you aren’t going to avoid dangerous climate 

change unless the major developing countries soon also get their 

emissions leveled off and in a downward path. And so we need to 

find the ways to share technology, share know-how with them so 

that they can do that as well. And I think the private carbon market can be a big player in making that happen. 

The CHAIRMAN. So we can have the audience watching on television understand, what does TRIPS actually stand for, so that we 

can bring them into this discussion? What does T-R-I-P-S actually 

mean? 

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Ms. HAVERKAMP. I am going to trip over this. Trade-related aspects of intellectual property rights. 

The CHAIRMAN. And that is the most important agreement in the 

international intellectual property area, would you say? 

Ms. HAVERKAMP. Well, the intellectual property provisions have 

gone into a lot of bilateral agreements, and well before TRIPS was 

put into—— 

The CHAIRMAN. When was TRIPS put into? 

Ms. HAVERKAMP. It was as part of the Uruguay Round, which 

was in 1994, 1995, when the WTO agreements entered into force. 

But before that there was a range of agreements around intellectual property that are administered by the World Intellectual Property Organization, WIPO. But I think TRIPS has been considered 

the most significant in creating the incentive for countries to establish strong intellectual property regimes in their domestic law. 

The CHAIRMAN. So how does TRIPS as administered by WIPO 

impact on the clean technology transfer area? If you can put that 

into English for our viewing audience. 

Ms. HAVERKAMP. I am sure my colleague would like to help as 

well. But I think that one way to say it is that the TRIPS agreement, when countries join the WTO, they take on an obligation to 

write into their domestic law strong intellectual property protections. And if countries do not pass those laws, or if they don’t enforce those laws, then countries who are hurt by that can bring enforcement actions in the WTO to compel them to establish a good 

intellectual property protection regime. 

The CHAIRMAN. Which, in your opinion, is the best place to address the intellectual property issues related to climate change, Ms. 

Haverkamp? 

Then I will ask you, Dr. Esper. 

Ms. HAVERKAMP. Well, I think my first caveat would be that I 

think that the picture is still emerging of how significant these 

issues are and whether and what kind of fixes might be needed. 

But I think that climate change is a problem that requires—that 

needs to be addressed across multiple fora, and the U.N. climate 

negotiations does not have the sufficient expertise or involvement 

of all the right ministries to address all the issues. 

So I think that the IP issues are coming up here, but it may well 

be, depending on the kind of concerns that emerge, that the other 

fora like the WTO TRIPS agreement would be an appropriate place 

to address it. I think also that is just a political reality that I don’t 

think you are going to get consensus to address these problems in 

the climate negotiations. 

The CHAIRMAN. And Dr. Esper. 

Mr. ESPER. It is a good question. I was in Geneva a few weeks 

ago, and this issue has been debated back and forth for some time 

now between the WTO and the WIPO and the UNFCCC. My sense 

is they are coming to some conclusion, which we fully support, that 

the WIPO is the best place to handle IP issues for the reasons that 

my colleague cited; everything from the expertise, the capacity, the 

ability to bring to bear all the different parties to the agreement, 

and to be able to address and consider any unintended consequences. 

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This is one area where the WHO has already acknowledged that 

they believe in the health care venue that the WIPO, the Intellectual Property Organization, would take the lead. So our view has 

been that IP is best handled in the WIPO. 

But going back to your original question, I think the issue really 

is about tech transfer, not about IP. It just tends to be the case 

that for one reason or another some governments, some NGOs, 

jumped people on the IP issue and cited that as the problem. And 

I think, as I pointed out in my testimony, others have as well, IP 

isn’t the obstacle here, it is what is going to get us innovation. 

When you start looking through the case-by-case, country-by-country examples, you find that certainly in the least developed countries patents aren’t the problem. Many of the technology solutions 

aren’t patented. Reforestation is certainly something that is not 

patented. But when you start moving up the ladder in terms of developing countries, that is where it gets a little bit trickier as they 

may need different types of technologies. 

The CHAIRMAN. Interesting, interesting. 

Mr. Rao. 

Mr. RAO. Mr. Chairman, I have a slightly different view on that. 

I have actually given the details in the testimony of an idea. The 

TRIPS is administered by WIPO. And TRIPS by default actually 

talks about the trade-related aspects of IP. Perhaps it probably 

won’t be a bad idea to actually make this a trade issue, because 

at the end of the day, IP without commercialization doesn’t really 

mean much. IP for the sake of IP is not going to get us anywhere. 

The CHAIRMAN. You don’t know how as a history major, you 

know, all history and history majors in college envied the kids who 

were the science majors and the technology majors because they 

know what they want to do. And we are just taking satisfaction in 

these history and English books that we are reading. And here for 

just one brief moment, it only lasted until I recognized you again, 

I got great satisfaction. So sometimes IP just for the sake of IP 

does really serve a purpose, okay? It only lasted a very transitory 

moment. But I don’t want you to underestimate the satisfaction I 

felt as a history major in also having that big breakthrough. 

Mr. RAO. Well, perhaps maybe in the vein of Hite’s law and other 

laws maybe we have a Markey’s law, an intermittent cleaning of 

solar panels at some point. 

The CHAIRMAN. And intermittent satisfaction from coming up 

with that. 

Mr. RAO. From coming up with it, absolutely, I agree. 

Actually I was talking about taking a different approach to IP. 

Instead of actually having this for the sake of IP internationally, 

maybe in conjunction with what Mr. Nelsen was talking about here 

in terms of having an IP clearinghouse as an exchange. It actually 

has been tried by the World Business Council on Sustainable Development, they call an eco-patent pooling. But they don’t 

incentivize the innovators; it is more just to share ideas. 

But the clearinghouse that I was talking about actually does 

incentivize, and this is exclusively for climate change-ready technologies now across the board. You take this out of this realm of 

debate, because while we are debating, we are polluting. We are actually making this War of the Worlds of a play. 

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So my idea was actually if you add this Green Bank, I think it 

was actually—I called it funding, but made this a part of the WTO 

effort where the clearinghouse actually takes responsibility; you 

pay for play, you get in. If you have an idea, you get in, and you 

can actually take IP as well. It lets innovators actually take advantage of ideas around the world. 

The interesting thing it is not about the large companies alone. 

I think the backbone of our economy and most other economies is 

what I call the SMEs, the small medium enterprises. Innovation 

comes out of there. And providing them with access to ideas and 

incentives for getting new ideas innovation is going to make a difference for us to create jobs here as well. 

The CHAIRMAN. Okay. Great. Thank you. 

Mr. Nelsen. 

Mr. NELSEN. I think as long as it is not compulsory, those kind 

of exchanges work. But for the real big breakthroughs, which are 

the ones that are actually going to matter to us, all the incremental 

stuff added up will not get you to solar that competes with existing 

electricity. There needs to be major innovative breakthroughs. And 

those are happening, but those people probably won’t want to put 

those in. 

And one final point. The difference between the HIV issue and 

what we are talking about is the R&D costs are great on both, but 

the deployment cost on these energy solutions is very large. So one 

biofuels plant that is just a demonstration plant in the U.S. costs 

more than the total manufacturing cost of all the HIV drugs that 

have been distributed in Africa. So it is a very different, completely 

different equation. 

The CHAIRMAN. I was only making reference to a hearing that we 

had yesterday with Dr. Emanuel Sachs, who is an MIT professor 

who created the technology that led to the creation of the company 

Evergreen Solar Company. And what he did was he presented us 

a chart which showed how the cost of generating a kilowatthour 

from solar had dropped from $5 down now to about 20 cents, and 

that it improves about 18 percent per year technologically; and that 

with his new company, 1366, which is a new company in Lexington, Massachusetts, with his new state-of-the-art technology 

making an additional improvement, that he sees actually by the 

year 2020 that the generation of electricity from PV will be equivalent to that of coal, and that by 2020 we can expect that 7 percent 

of the electricity in the world will be generated from photovoltaic 

technology. 

Now, you look at that, Mr. Nelsen, and your response would 

be—— 

Mr. NELSEN. My response would be that—it is a good news response—was that we have a company that is going on sun at 

NREL in a week that will probably do 6 cents to 8 cents a 

kilowatthour, so you don’t have to wait 20 years. 

The CHAIRMAN. We don’t have to wait 20 years. No, he is saying 

that we will actually see by 2020 7 percent of all electricity in the 

world. Do you think that is a realistic goal once you get it down 

to 6 cents to 8 cents? 

Mr. NELSEN. I think it is all about cost. And whether it is 

biofuels or it is solar, it is all about cost. And it looks like, I would 

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say, that the breakthroughs probably will be there and are almost 

exclusively going to be done in the U.S. 

The CHAIRMAN. That is the technological breakthroughs will be 

made in the United States? 

Mr. NELSEN. Yes. 

The CHAIRMAN. And then the question becomes what are the 

rules for the technology transfer to get them out to other countries? 

And so for Bahrain it would be that we need to have windshield 

wipers on the technology, but assuming that we can make that 

breakthrough as well and cut the deal with the family that still 

holds the patent rights to that. 

Mr. NELSEN. And I would love to be able to put a giant biofuels 

or solar manufacturing facility in Mali or some other poor country. 

I just don’t want to be compelled to do it. So the question is what 

are the right incentives to do that? 

The CHAIRMAN. And how would you be compelled? 

Mr. NELSEN. If somebody told me that I had the license—you 

know, that I had to give away my technology to some world body 

versus some incentive structure, which I think could be created to 

get me to do that. 

The CHAIRMAN. You would lose your incentive to further invest 

here in the United States if you were compelled then to transfer 

the technology overseas. 

Mr. NELSEN. Exactly. And I would have suspicions that our 

friends in competing strategic countries would take advantage of 

those situations to make fungible assets like fuels other places. 

The CHAIRMAN. Okay. That is great. 

So here is what I would like to ask each of you to do. We will 

start in reverse order of the opening statements; ask each of you 

to give us the 1 minute you want us to remember as we are moving 

forward on these issues in the 130 days up to Copenhagen. The select committee will be in Copenhagen, and we will be working on 

the effort to have a bill put on the President’s desk before he goes 

to Copenhagen. So please give us your 1-minute closing bit of advice. 

Dr. Esper, we will begin with you. 

Mr. ESPER. Great. Thank you, Mr. Chairman. 

My 1-minute synopsis is this: Technology is crucial to addressing 

climate change, and if we want the advanced technologies that are 

going to get us there, what we need to do is preserve an IP system 

that has generated technologies over the decades. And so as we 

look at what is happening now at the UNFCCC more broadly, it 

is critical that the United States make clear that IP rights are not 

on the table for negotiation or for undermining. And I think the 

Congress can play an important role in that through passing legislation, as you have already done; through speaking to the administration, asking them to come forward; offering statements of your 

own, but making clear to our partners both in the developed world 

and in the developing world who look to us for leadership that IP 

rights are the solution, not the problem, and we should focus on 

the real problems that myself and various others here have outlined today. 

The CHAIRMAN. Ms. Haverkamp. 

Ms. HAVERKAMP. Thank you. 

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I agree tech transfer is—technology is critical to solving the climate change problem. Tech transfer is critical to that. What will 

make that happen are policies, U.S. Government policies, that cap 

on carbon that the Waxman-Markey bill represents. Similarly, in 

developing countries, however much technology we develop and are 

able to send, it won’t go to developing countries unless they have 

domestic policies and incentives that require it to be used there. 

As far as the U.N. climate negotiations, I think they have been 

very much at a rhetorical stage. Everyone is waiting for the United 

States to come to the table. Now that the U.S. is here, we need to 

move the negotiations into a much more thoughtful ‘‘get down into 

the details’’ stage of discussion. And I think that for the IPR issues, 

it is time to get more concrete; get beyond the rhetoric to what are 

the specific concerns that are motivating, what are the examples 

that are motivating countries’ proposals so we can figure out what 

is a serious concern that needs addressing and what is negotiating 

bait. 

The CHAIRMAN. Thank you all very much. 

Mr. Nelsen. 

Mr. NELSEN. The innovations are happening, they are going to 

happen in the U.S., there are going to be breakthroughs, and they 

are going to be the solution to climate change. And they are also 

going to be what is going to allow us to lead the next 10 or 20 years 

of the economy in the world. They are going to create a lot of jobs 

at home, and we need to protect them in a smart way, but also deploy them with incentives, not compulsory. 

The CHAIRMAN. Thank you, Mr. Nelsen. 

Mr. Rao. 

Mr. RAO. Thank you, Mr. Chairman. 

Two points I would like to make. One is what got us here necessarily won’t get us there. We have to look at IP very, very differently. So we have successes over the past decade. I think this 

is going to be very different. 

I would like to propose that we do actually look at an IP exchange combined with some kind of a funding agency that we call 

a World Bank or Green Bank, or whatever it is. But actually I 

think it should be a private not-for-profit sort of organization where 

it is voluntary participation, where somebody has to—to take, 

somebody has to contribute. I would like to propose that we take 

that to the next level and propose it. If not, things will continue 

to happen in China and Saudi Arabia and India without the U.S. 

presence in there, and that probably will be detrimental to us. 

Thank you. 

The CHAIRMAN. Well, we thank each of you. We clearly have a 

challenge before us. We want to protect intellectual property rights. 

We want to make sure that inventors in the United States have an 

incentive to continue to invent, and that investors have an incentive to invest in those inventors. And we have to make sure that 

we properly analyze the markets that we are talking about. 

Ms. Haverkamp, I think, keeps pointing out that we need to create a domestic marketplace for the products that we are inventing 

here in the United States. What is the point of becoming the world 

leader in solar and wind if we don’t actually not only invent them, 

but then deploy them here and create the markets here, create the 

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manufacturing jobs here, which is what the Waxman-Markey bill 

is all about, to create those incentives for the development of a domestic marketplace even as we then create the rules for the transfer of the technologies into the international marketplace to make 

sure that the inventors here benefit, but also that the world is presented with a solution to the climate change problem that will affect, unfortunately, poorer countries more gravely than the wealthier countries. And that is the balance we have to strike here. 

I think we have to respond to this, and embrace the opportunity 

of the challenge, and to do so in a telescoped time frame. We have 

to engage China to make sure that China as a special case understands that we need to have some regime of protection of intellectual property put into effect so that we create the conditions for innovation here while we have a mechanism, perhaps an international Green Bank, that we can work through as a concept to be 

able to ensure that this technology is transferred, but with proper 

compensation for those who have taken the risk and have the ability to create. 

So that is really the framework for our challenge going forward 

for the rest of this year. With the world gathering of 190 nations 

coming to Copenhagen, I think they will be looking to the United 

States to frame this correctly. But they will also be looking to 

China to see if we get the proper response from them so that we 

can be the world leaders in that negotiation. 

Your hearing has been very helpful to us in the framing of the 

issue. We would like to stay close to you over the next 130 days 

so that you can help to illuminate the choices that our policymakers will have to make as we enter those negotiations. 

Thank you all very much. This hearing is adjourned. 

[Whereupon, at 11:28 a.m., the committee was adjourned.] 

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