Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Explaining differences in sub-national patterns of clean technology transfer to China and India

Abstract

The Kyoto Protocol’s Clean Development Mechanism (CDM) has the capacity to incentivize the international transfer of environmentally sound technologies. Given that both countries are expected to have similar incentives when managing the distribution of technology transfer within the country, why do sub-national patterns in the allocation of projects with technology transfer differ? Using comparable political–economic data compiled for China and India, we offer an explanation for these differences. In China, where the government regards the CDM as a tool for achieving sustainable development, technology transfer is concentrated in provinces that need it the most and that are most conducive to receiving transfers (i.e., economically less developed, yet heavily industrialized provinces). In India, where the government takes on a “laissez-faire” approach to the CDM, neither level of economic development nor that of industrialization affects clean technology transfer. In this regard, although the incentives are similar, the capacity to pursue them is not comparable. We test these hypotheses using data on CDM technology transfer across Chinese provinces and Indian states during the 6-year period from 2004 to 2010.

This is a preview of subscription content, log in to check access.

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Notes

  1. 1.

    See the research design section for data sources.

  2. 2.

    Article 10(c) of the Kyoto Protocol does specify the need for all Parties involved to cooperate in the development, application, diffusion, and transfer of environmentally sound technologies in the public domain.

  3. 3.

    At the firm level, technology transfer often results from cooperation between multinational companies, such as joint ventures (Heller and Shukla 2003; Ivarsson and Alvstam 2005). In the absence of a strong national policy, technology transfer is expected to be higher for most developed Indian states because they already host branches of internationally operating technology leaders.

  4. 4.

    Officially, China administers 33 sub-national divisions, but CDM project data are not available for Tibet and the two special administrative regions, Hong Kong and Macau. This leaves us with 30 “provinces.”

  5. 5.

    In India, there are 35 sub-national administrative units: 28 states and 7 Union Territories. However, with the exception of Delhi, data for the Union Territories (i.e., Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, Lakshadweep, and Pondicherry) and for the states of Mizoram and Nagaland is not available. Accessed June 16, 2012.

  6. 6.

    CDM data are available from http://cdmpipeline.org. Accessed July 11, 2012. Of all the 6,977 CDM projects available in the CDM/JI Pipeline database for years 2004–2010, the projects implemented in China and India jointly account for about 65 % of the data.

  7. 7.

    The data for CDM projects with technology transfer are available from UNFCCC (2010) upon request.

  8. 8.

    As shown in the supplementary appendix, correlation coefficients vary from \(r=+0.497\) for total Chinese CDM projects and 2012 CERs to \(r=+0.839\) for total Indian CDM projects and 2012 CERs. All correlation coefficients are strongly positive and highly statistically significant.

  9. 9.

    In fact, the UNFCCC (2010) report also distinguishes between the presence of equipment transfers, knowledge transfer, and both. To avoid unstable estimation, we do not use this information to construct separate dependent variables.

  10. 10.

    See http://chinadataonline.org. Accessed March 20, 2012.

  11. 11.

    See http://planningcommission.nic.in/data/datatable/. Accessed April 25, 2012.

  12. 12.

    For the data on Chinese provinces, we use real GDP growth data provided by China Data Online to account for inflation. For the data on Indian states, we use price data taken from the Directorate of Economics and Statistics. These sources account for price increases in provinces and states, respectively. Finally, we used exchange rate data from the Reserve Bank of India (http://www.rbi.org.in/scripts/PublicationsView.aspx?id=13734) and the China–US foreign exchange rate provided by the Board of Governors of the Federal Reserve System (http://research.stlouisfed.org/fred2/series/AEXCHUS?cid=32219), to convert these values into 2005 US$. Accessed July 7, 2012.

  13. 13.

    The variables used are “Total Output” (India) and “Gross Industrial Output” (China). For India, see http://mospi.nic.in/mospi_new/upload/asi/ASI_main.htm?status=1&menu_id=88. Accessed July 7, 2012.

  14. 14.

    The deflators were provided by the IMF. See http://elibrary-data.imf.org/public/FrameReport.aspx?v=3&c=20840382. Accessed July 7, 2012.

  15. 15.

    For China, the data are from China Data Online. For India, the data are from the Ministry of Power. See http://pib.nic.in/newsite/erelease.aspx?relid=84206 and http://pib.nic.in/newsite/erelease.aspx?relid=30158. Accessed on July 7, 2012.

  16. 16.

    Election data come from the Election Commission of India and are available from http://eci.nic.in/eci_main1/ElectionStatistics.aspx. Accessed on April 13, 2014.

  17. 17.

    In our dataset, 70 out of 298 province-years have large-scale projects. This accounts for about one-quarter of the dataset.

  18. 18.

    Overall, only 38 out of 298 province-years (13 %) do not have a single renewable energy project.

  19. 19.

    See the supplementary appendix for a histogram.

  20. 20.

    See http://planningcommission.nic.in/data/datatable/index.php?data=datatab. Accessed May 20, 2012.

  21. 21.

    For summary statistics and a correlation matrix for the entire sample, see the supplementary appendix.

  22. 22.

    For models (1) to (3) in Table 3, the normally distributed test statistics are \(z=2.24\), \(z=2.20\), and \(z=1.44\), respectively. This yields corresponding \(p\) values of \(p<0.012\), \(p<0.013\), and \(p<0.077\), supporting the choice of zero-inflated models over non-inflated count models.

  23. 23.

    While dropping the first year reduces the number of CDM projects by only eleven, seven of which feature technology transfer, excluding projects from 2010, reduces the sample size by about 11 %. Out of 4,460 CDM projects, 939 are implemented in 2010 with 56 or about 6 % carrying technology transfers.

  24. 24.

    See the supplementary appendix for data sources and the exact construction of these renewable potential controls.

  25. 25.

    A full list of Chinese provinces with CDM service centers and Indian states with CDM cells as well as the regression results can again be found in the appendix.

  26. 26.

    The full results tables for these additional robustness checks can be found in the supplementary appendix.

  27. 27.

    We exclude these project types mainly because they are the largest categories in our dataset. Renewable projects account for 67 % of the data (3,005 projects), supply side energy efficiency projects for 14 % of the data (634 projects), and projects concentrating on methane, coal, and cement emissions for 9 % of the data (397 projects).

References

  1. Ai, C., & Norton, E. C. (2003). Interaction terms in logit and probit models. Economics Letters, 80(1), 123–129.

  2. Babu, N., Yuvarah, D., & Michaelowa, A. (2003). Removing barriers for renewable energy CDM projects in India and building capacity at the state level. HWWA Report 237, Hamburg Institute of International Economics.

  3. Bayer, P., & Urpelainen, J. (2013). External sources of clean technology: Evidence from the Clean Development Mechanism. Review of International Organizations, 8(1), 81–109.

  4. Bayer, P., Urpelainen, J., & Xu, A. (2014). Laissez faire and the Clean Development Mechanism: Determinants of project implementation in Indian states, 2003–2011. Clean Technologies and Environmental Policy. doi:10.1007/s10098-014-0746-3.

  5. Bayer, P., Urpelainen, J., & Wallace, J. (2013). Who uses the Clean Development Mechanism? An empirical analysis of projects in Chinese provinces. Global Environmental Change, 23(2), 512–521.

  6. Benecke, G. (2009). Varieties of carbon governance: Taking stock of the local carbon market in India. Journal of Environment and Development, 18(4), 346–370.

  7. Brambor, T., Clark, W. R., & Golder, M. (2006). Understanding interaction models: Improving empirical analyses. Political Analysis, 14(1), 63–82.

  8. Brewer, T. L. (2008). Climate change technology transfer: A new paradigm and policy agenda. Climate Policy, 8(5), 516–526.

  9. Capoor, K., & Ambrosi, P. (2007). State and trends of the carbon market 2007. World Bank. https://openknowledge.worldbank.com/handle/10986/13406.

  10. CDM0472. (2006). Project design document for Project CDM0472. http://cdm.unfccc.int/UserManagement/FileStorage/9M7MLW12TKXFW9GRJRYR3MAH0NE181. Accessed 21 June 2012.

  11. CDM4412. (2008). Project design document for Project CDM4412. http://cdm.unfccc.int/UserManagement/FileStorage/TIJ1RMX9WC5H2UGDPFZQ0EYVSANK3O. Accessed 21 June 2012.

  12. Chatterjee, E. (2012). Dissipated energy: Indian electric power and the politics of blame. Contemporary South Asia, 20(1), 91–103.

  13. Chen, S., & Ravallion, M. (2008). China is poorer than we thought, but no less succeessful in the fight against poverty. World Bank Policy Research Working Paper 4621.

  14. de Coninck, H., Haake, F., & van der Linden, N. (2007). Technology transfer in the Clean Development Mechanism. Climate Policy, 7(5), 444–456.

  15. de Jong, C., & Walet, K. (Eds.). (2004). A guide to emissions trading: Risk management and business implications. London: Risks Books of Incisive Financial Publishing.

  16. Dechezleprêtre, A., Glachant, M., & Ménière, Y. (2008). The Clean Development Mechanism and the international diffusion of technologies: An empirical study. Energy Policy, 36(4), 1273–1283.

  17. Doranova, A., Costa, I., & Duysters, G. (2010). Knowledge base determinants of technology sourcing in Clean Development Mechanism projects. Energy Policy, 38(10), 5550–5559.

  18. Fuhr, H., & Lederer, M. (2009). Varieties of carbon governance in newly industrializing countries. Journal of Environment and Development, 18(4), 327–345.

  19. Ganapati, S., & Liu, L. (2008). The Clean Development Mechanism in China and India: A comparative institutional analysis. Public Administration and Development, 28, 351–362.

  20. Ganapati, S., & Liu, L. (2009). Sustainable development in the Clean Development Mechanism: The role of designated National Authority in China and India. Climate Policy, 52(1), 43–60.

  21. Gao, G. (2008). Speech at China 2008 CDM experience exchange conference in Beijing. Inspector of Department of Climate Change of NDRC.

  22. Greene, W. H. (2010). Testing hypotheses about interaction terms in nonlinear models. Economics Letters, 107(2), 291–296.

  23. Haites, E., Duan, M. S., & Seres, S. (2006). Technology transfer by CDM projects. Climate Policy, 6(3), 327–344.

  24. Hascic, I., & Johnstone, N. (2011). CDM and international technology transfer: Empirical evidence on wind power. Climate Policy, 11(6), 1303–1314.

  25. Heller, T., & Shukla, P. R. (2003). Beyond Kyoto: Advancing the international effort against climate change. Arlington, VA: Pew Center on Global Climate Change.

  26. Ivarsson, I., & Alvstam, C. G. (2005). Technology transfer from TNCs to local suppliers in developing countries: A study of AB Volvo’s truck and bus plants in Brazil, China, India, and Mexico. World Development, 33, 1325–1344.

  27. King, G., Tomz, M., & Wittenberg, J. (2000). Making the most of statistical analyses: Improving interpretation and presentation. American Journal of Political Science, 44(2), 341–355.

  28. Lecocq, F., & Ambrosi, P. (2007). The Clean Development Mechanism: History, status, and prospects. Review of Environmental Economics and Policy, 1, 134–151.

  29. Lewis, J. I. (2007). Technology acquisition and innovation in the developing world: Wind turbine development in China and India. Studies in Comparative International Development, 42(3–4), 208–232.

  30. Lieberthal, K., & Oksenberg, M. (1990). Policy making in China: Leaders, structures, and processes. Princeton: Princeton University Press.

  31. Lu, G. (2004). Incineration of HFC-23 waste streams CDM projects in China. Opportunities in the project development and cooperation.

  32. Nautiyal, H., & Varun, (2012). Progress in renewable energy under Clean Development Mechanism in India. Renewable and Sustainable Energy Reviews, 16(5), 2913–2919.

  33. Newell, P. (2009). Varieties of CDM governance: Some reflections. Journal of Environment and Development, 18(4), 425–435.

  34. Ockwell, D. G., Watson, J., MacKerron, G., Pal, P., & Yamin, F. (2008). Key policy considerations for facilitating low carbon technology transfer to developing countries. Energy Policy, 36(11), 4104–4115.

  35. Ockwell, D., Watson, J., MacKerron, G., Pal, P., Yamin, F., Vasudevan, N., & Mohanty, P. (2007). UK-India collaboration to identify the barriers to the transfer of low carbon energy technology. Sussex Energy Group, TERI, and Institute of Development Studies at University of Sussex.

  36. Popp, D. (2011). International technology transfer, climate change, and the Clean Development Mechanism. Review of Environmental Economics and Policy, 5(1), 131–152.

  37. Schneider, M., Holzer, A., & Hoffman, V. H. (2008). Understanding the CDM’s contribution to technology transfer. Energy Policy, 36(8), 2930–2938.

  38. Schroeder, M. (2009a). Utilizing the Clean Development Mechanism for the deployment of renewable energies in China. Applied Energy, 86(2), 237–242.

  39. Schroeder, M. (2009b). Varieties of carbon governance: Utilizing the Clean Development Mechanism for Chinese priorities. Journal of Environment and Development, 18(4), 371–394.

  40. Seres, S., Haites, E., & Murphy, K. (2009). Analysis of technology transfer in CDM projects: An update. Energy Policy, 37(11), 4919–4926.

  41. Shih, V., Adolph, C., & Liu, M. (2012). Getting ahead in the communist party: Explaining the advancement of central committee members in China. American Political Science Review, 106(1), 166–187.

  42. Streck, C., & Lin, J. (2008). Making markets work: A review of CDM performance and the need for reform. European Journal of International Law, 19(2), 409–442.

  43. Takahashi, K., & Zhang, M. (2011). Market mechanisms country fact sheet: People’s Republic of China. Institute for Global Environmental Strategies, Market Mechanism Group.

  44. UNFCCC. (2010). The contribution of the Clean Development Mechanism under the Kyoto Protocol. United Nations Framework Convention on Climate Change.

  45. Vuong, Q. H. (1989). Likelihood ratio tests for model selection and non-nested hypotheses. Econometrica, 57(2), 307–333.

  46. Wang, B. (2010). Can CDM bring technology transfer to China? An empirical study of technology transfer in China’s CDM projects. Energy Policy, 38(5), 2572–2585.

  47. Wara, M. (2007). Is the global carbon market working? Nature, 445(7128), 595–596.

Download references

Acknowledgments

This article was written during a research stay funded by an ERP fellowship of the Studienstiftung des deutschen Volkes. Patrick Bayer gratefully acknowledges this generous funding and is thankful for the hospitality of Columbia University. He is also thankful for a postdoctoral fellowship at Washington University in St. Louis from the German Academic Exchange Service (DAAD). We thank Valerie Pinkerton and Sung Eun Kim for comments on a previous draft.

Author information

Correspondence to Patrick Bayer.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (pdf 86 KB)

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Bayer, P., Urpelainen, J. & Xu, A. Explaining differences in sub-national patterns of clean technology transfer to China and India. Int Environ Agreements 16, 261–283 (2016). https://doi.org/10.1007/s10784-014-9257-2

Download citation

Keywords

  • Technology transfer
  • CDM
  • China
  • India
  • Sustainable development
  • Subnational variation