development. Consequently, facilitating access to environmentally-friendly technologies and stimulating their uptake are essential parts of an effective green growth strategy.<sup>29</sup> In most developing countries, there is significant scope for policy to remove existing distortions and address weaknesses in the business environment that impede private innovation, in particular adaptation and dissemination of technologies from more advanced countries and within developing countries from urban to rural areas, as well as strengthening the absorptive capacity of the domestic economy. Such policy efforts can cover a broad range, including adopting more open foreign trade, investment and technology licensing regimes, strengthening the country‘s metrology, testing and quality (MSTQ) facilities to support upgrading toward more energy-efficient technologies, improving the quality of and access to mobile phones, Internet and other communications networks, reducing domestic barriers to firm entry and exit, improving access to finance, strengthening skills and capacity development, and implementing more demand-side policies such as public procurement, regulations and standards. The section begins by surveying key policies to facilitate access to existing technologies, then discusses the critical set of supporting policies to stimulate their uptake, and concludes with a discussion of the relative effectiveness of supply-push versus demandpull policies.

# **_3.2.1 Facilitate access to green technologies_**

Openness to **international trade and FDI** are among the key factors correlated with adoption rates for technology. Many green technologies are embodied in imported capital goods, machinery and equipment; some are knowledge-based processes or business models and diffuse via movements of people attached to MNCs (multinational corporations) or from the diaspora; and some can be copied by studying imported final goods, or by studying patents (when elapsed) or inventing around them (when still effective). There is evidence that tariffs on renewable energy technologies and subsidies for fossil fuels do more to limit technology transfer of clean technologies than patent protection.<sup>30</sup> A recent study finds that eliminating tariff and non-tariff barriers in the top 18 developing countries ranked by GHG emissions would increase imports by 63 percent for energy-efficient lighting, 23 percent for wind power generation, 14 percent for solar power generation, and 4.6 percent for clean coal technology.<sup>31</sup> In a study of electric power plants in India, Khanna and Zilberman (2001) find that removing import barriers to higher-quality coal would increase the adoption of more energy-efficient technology and potentially decrease carbon emissions.

The **Clean Development Mechanism** (CDM) of the Kyoto Protocol is an explicit mechanism to boost technology transfer and diffusion, as it allows high-income countries to develop or finance GHG emissions reduction projects in developing countries in exchange for emission reduction credits. However, high-income country investments tend to be small when compared to FDI. Based on an analysis of GHG mitigation technology transfers, Dechezleprêtre et al. (2008) show that international transfers have taken place in less than half of the CDM projects, typically combining transfer of equipment with knowledge and operating skills. They also find that most technology transfers concerned end-of-pipe destruction of GHGs in chemical, agricultural and waste management industries (highly specialized, with

> 29 See Lanjouw and Mody (1996) and Popp (2006) who both find that access to foreign available knowledge is necessary but not sufficient for local use, with foreign knowledge typically serving as a blueprint and further adaptive R&D required to fit the technology to local markets.

> 30 See Copenhagen Economics (2009) and Barton (2007) as cited by Hall and Helmers (2010).

> 31 See Table 3.2, World Bank (2008); the assessment is based on first-round approximations rather than full general equilibrium effects.

24