India’s negotiating position on intellectual property (IP) at the Copenhagen climate change conference might be good politics, but it’s unlikely to help developing countries cut their emissions.
Many key negotiating deadlocks at Copenhagen are focused on classic attitudinal divides between North—meaning developed—and South—meaning developing —countries; and none more so than over access to climate-friendly technologies.
As a South country, India has sought inclusion into the negotiating text on how to boost the transfer of climate-friendly technologies through the removal of IP rights, principally patents, on climate-friendly technologies, many of which are owned by US and European companies.
Working with Bangladesh, Bolivia and Ghana, India is complaining about its obligations under the World Trade Organization’s (WTO) IP treaty—called the Agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS. These obligations that are claimed to increase the price and to cut access to essential medicines are also stopping access to affordable climate-friendly technologies.
Illustration: Jayachandran / Mint
Last Wednesday’s negotiating text included flexibility for countries to ignore IP rights that would prevent countries “from taking any measures to address adaptation or mitigation of climate change...and (the) transfer of, and access to, environmentally sound technologies and know-how”. The text also proposed the establishment of a global technology pool that would grant access to royalty-free patented technologies and would also “revoke” existing patents on these technologies.
One of the reasons technology access is such a sore negotiating point is because, in the words of Ajay Mathur, director of India’s Bureau of Energy Efficiency, “technology is the only way” developing countries can afford to cut their emissions. But concerns about patents on access to climate-friendly technologies are built on false foundations—they’re radically different technologies to medicines.
We know the patent premium on medicines makes up a significant portion of the final price because the cost of initial research protected by patents is large and the physical manufacture cost, the marginal price, is small. Medicines are also built on single-compound patented technology that often turns the exclusive right a patent confers into a near-monopoly, because of the lack of competition from other products that can provide the same therapeutic outcome.
But in the case of climate-friendly technologies, the physical cost and tacit knowledge in manufacture and deployment make up the vast majority of the final product’s cost. And because there is significant inter- and intra-product competition, the leveraging capacity of a patent is modest. The business reality is that if a wind turbine manufacturer sells an expensive product there are plenty of other competitor technologies in the marketplace, as well as other wind turbine manufacturers, to keep the price down. And those were the personal conclusions of former Indian TRIPS negotiator, Jayashree Watal, at a symposium jointly organized by the University of Copenhagen and WTO last weekend, who pointed out the ineffectiveness of the comparison between medicines and climate-friendly technologies.
Lingering behind complaints about patents is the perception that buying these technologies will result in a boon for developed country companies at the expense of the world’s poor. But a March study by Copenhagen Economics, a consultancy, found that from more than 200,000 patents sampled, only 0.1% was registered in the lower-income developing countries—suggesting that the developed world is essential for these patents. So it’s widely accepted in Copenhagen that access to these technologies is essential, but developing countries can take action closer to home to promote technological diffusion.
Yet, a 2007 World Bank report found that tariff and non-tariff barriers on low-carbon technologies in the top 18 greenhouse-gas emitting developing countries can be as high as 165%. India’s barriers on fluorescent lamps alone amount to 117%. The extent of trade barriers on environmental goods and services in rich and poor countries alike has prompted discussions about a new international trade agreement to seek their removal.
Removing patents is also likely to disincentivize patent holders from licensing their technologies into developing country markets. And if they don’t do so, developing countries will only delay the development of their own domestic manufacturing and skills capacity to manufacture their own technologies and diffuse them.
All this is important because, in the face of steep and costly carbon emissions cuts, developing countries will need next-generation technologies to make the cost of mitigation and adaptation affordable. But without patents, innovators will be reticent to make the financial commitment necessary for the innovation of climate-friendly technologies, let alone their deployment in the developing country markets that need them.
For now the proposals seem back off the table, but if India insists on the inclusion of anti-IP text in a final Copenhagen agreement, it may win a political victory. Still, it’ll come at the expense of developing the most cost-effective way to cut emissions.
Tim Wilson is director of the climate and trade unit at Australia’s Institute of Public Affairs. Comment at email@example.com