Green Technology as a Public Good?

At the last week’s conference on “Climate Change: Technology Development and Transfer,” Indian PM Singh proclaimed that green climate technologies should be considered global public goods (GPG). Although Singh’s statement failed to grab headlines in the Western press it a remarkable and important idea that will surely receive increasing scrutiny.

So what is a global public good?  Most simply, they are goods that are non-rival, non-excludable, and serve a global benefit (see Kaul & Mendoza for a more detailed discussion). In economic terms non-rival refers to goods whose use by one individual does not impair another individual’s ability to use the good. Non-excludable means that no one can be prevented from using the good. The implication of a good being considered a GPG is a change in Intellectual Property Rights (IPR) pertaining to the good. Instead of giving full deference to patent holders and allowing for pure profits, making the good (whether a vaccine or green technology) a GPG removes exclusive rights conferred by patents and allows the good to be produced more widely and more cheaply.

The closest analogy is the campaign by developing nations and NGOs to classify HIV/AIDS drugs as global public goods. For HIV/AIDS drugs this would alter the structure of pharmaceutical patents and greatly diminish profit margins. Despite strong opposition from Western governments and pharmaceuticals developing nations have successfully used the threat of breaking patents to pressure individual firms to lower prices of antiretroviral drugs. Indeed, PM Singh made the comparison between HIV/AIDS drugs and green technology, claiming that “the moral case of a similar approach for protecting our planet and its life support system is equally compelling.”

So why might green technologies be considered global public goods? Most simply, every nation must deploy green technologies to decrease their greenhouse gas emissions to confront the problem of global warming. Developing nations argue that they cannot afford to invest in green technologies while simultaneously developing their economies and addressing issues of poverty. The G77 has long maintained that developed countries must do much more to contribute financially and to aid technology transfer. Declaring green technology GPGs would greatly limit the profits of firms and producer nations. While the exact calculation is yet unclear Singh said the world must strive to “balance rewards for innovators with the need for the common good of mankind.”

What about the implications of green technology as GPGs? First, nations with large green technology industry would certainly stand to suffer if profits are significantly curtailed. This would include Germany, Japan, China, and the United States. How would these countries react? Surely those currently benefiting from the current structure will not be enthusiastic about the proposal.

Stay tuned for more about this issue. Technology finance and transfer are sure to be major issues this December in Copenhagen…

Further Reading: UNDP Book, Providing Global Public Goods

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5 Responses

  1. The implication of making public goods all this new green technologies maybe will stop the creation of new technology.
    Which company wants to invest time and capital in new technology without profits?

    • I don’t think it’s that simple – surely that’s the picture industry will paint though. The balance between encouraging innovation and the global good wouldn’t eliminate profits.

      As Frank Ackerman says, global warming is the largest market failure in history so surely it demands significant market intervention. Having a global regime set prices and limit profits for green tech seems a logical and important aspect in confronting such a market failure.

  2. An article appeared in the New York Times this morning that addresses this issue in terms of patents. Apparently, a few big corporations like Nike and IBM are putting their patents for certain items into an open forum for anyone to use with the hope that those that use their ideas will be more environmentally friends. It is a complicated process and may end up with disputes regarding intellectual property rights, but it is an interesting idea. In general, the big companies may charge a fee for using the patent so they will in turn make money while contributing to the “common good.” The link is below!

    http://www.nytimes.com/2009/11/01/business/01proto.html?em

  3. Note: There is a typo above. Clarification: That is supposed to say that companies are sharing patents in the hopes that more companies and suppliers will become more “environmentally friendly.” Oops!

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