Clean technology has evolved. Not only is it feasible to produce renewable energy on a large scale, it is also more profitable. But the cost of a wind turbine installed in Patagonia is much higher than one installed in Düsseldorf. In South America, this technology faces a prohibitive capital cost.
And it is the developing countries that lack the technology and must import the capital goods, as well as the associated inputs. Access to the technological frontier is a factor present in any process of productive transformation and industrialization, and this generates conflicts between those who have the knowledge and those who do not.
Today, negotiations on technology take place in the shadow of an international economic law marked by the neoliberal paradigm, where science and technology occupy a privileged place in the legal order and in the accumulation process.
The legal scaffolding of foreign investment and intellectual property restricts technology transfer to developing countries. This results from the various bilateral agreements, such as the Agreement on Aspects of Intellectual Property Rights of the World Trade Organization, which regulate foreign investment and technology with a pro-investor bias.
The tension between those who own the technology and those who have to make climate commitments is inserted in the context of a growing consensus in favor of concrete actions on the environmental crisis. Initially located in developed countries, the green wave has been gaining adherents around the world.
It all started with the publication of the Rome club report in 1972 and the first questions about the oil industry. With the Rio Declaration in 1992, the environmental issue reached the multilateral level. Slowly, the unlimited rights that benefit investors began to be questioned.
Slowly, but inexorably, the clean industry that began its march in those days, has now reached such maturity that it allows us to end the reign of “black gold”. But just as, on the one hand, we have the challenge of the climate crisis, on the other, we have economic and legal discipline. And within this framework, the climate crisis, among other things, questions the limitations of the technology transfer scheme. The gravity of the moment presents the need to transform you now.
Regrettably, good intentions are not enough. It’s just a matter of looking at the various international arbitrations initiated against States that tried to end coal-based energy production and that were sued by companies in the sector. Oil companies, which devised these mechanisms to protect themselves from the changes that promised decolonization, are now using them to protect themselves from the changes needed to deal with the climate crisis. The Energy Treaty ended up enshrining rights that are detrimental to the transition process.
The same could happen in South America if countries decide to limit, or even ban, coal power plants or oil activity. Investors could threaten them or sue them at Ciadi (International Center for Settlement of Investment Disputes), a structure associated with the World Bank.
The good news is that this latter entity recognizes the need to move the transition forward. The bad thing is that it does little to transform the legal and institutional framework that it helped to put in place four decades ago and that is now holding the process back.
Fortunately, a consensus is emerging to transform international law that makes technology transfer difficult and that overly protects foreign investors. Experts Karl Sauvant and Howard Mann proposed a few years ago to move towards a foreign investment scheme that prioritizes quality over quantity, equal rights, social improvement, care for the environment and transparency.
One of the main economic aspects that stand out is that the investment must promote research and development in the host country. We believe that any new treaty must also recognize technology transfer, another key aspect when discussing energy transition in the South.
The regional vision
ECLAC (Economic Commission for Latin America and the Caribbean) is not only a wonderful powerhouse of regional thinking, it is also one of the few organizations that have defended the importance of productive diversification and technological advances to lift the region out of economic and social backwardness. .
As a result, the issue of technology transfer has always been present in the elaboration of its proposals (as well as in the Andean Community of Nations manual). If before it highlighted the need for access to technical knowledge to advance industrialization, today it highlights the importance of access to also resolve environmental issues, including the fight against climate change.
But although there are numerous studies that address the environmental issue, little is said about the institutional restriction to which the region is subject due to the prevailing neoliberal legality. This gap must be addressed with developed countries so that promises become solutions. The international community needs to rethink the international rules governing intellectual property and the regime for promoting, protecting and facilitating foreign investment.
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