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Clean Energy Patents: More Transparency Needed

It is accepted that clean energy technology development will be pivotal in mitigating climate change and that transferring this technology to developing economies will be equally important in making these economies more socially responsible while supporting economic growth.

Last year's UN Copenhagen climate summit may have been considered a failure in terms of absolute emission reduction agreements, but it did call for the establishment of a mechanism to accelerate technology development and transfer and this process will have to be further developed in Cancun, Mexico, in UNFCCC meetings in December, due as REW goes to press. 

But for all the perceived value in developing and transferring clean energy technologies (CETs) there has been little empirical data on the relationship between technology development and transfer, that is until now.

A new study: 'Patents and clean energy: bridging the gap between evidence and policy' sets out to provide facts where previously there has been little data.

The empirical study, jointly undertaken by the United Nations Environment Programme (UNEP), the European Patent Office (EPO) and the International Centre for Trade and Sustainable Development (ICTSD), assessed the role of patents in the transfer of CETs and concludes that: policy processes and signals do matter; accurate and publicly available information is urgently needed on existing and emerging CETs; and, options to facilitate licensing of CETs to developing countries should be considered.

Commenting on the study, EPO president, Benoît Battistelli, said: 'The joint study is both exemplary and ground-breaking in its cross-sector collaboration to deliver results that have a direct benefit to society. Patents play a key role in providing information about existing technologies, the level of their development and geographic spread. This information facilitates an informed debate on climate change.'

Achim Steiner, UN Under-Secretary and executive director of UNEP, said: 'Far from being a drag on economies and innovation, international efforts to combat climate change have sparked technological creativity on low carbon, resource efficient green economy solutions. The challenge now is to find ways in which these advances can be diffused, spread and transferred everywhere so that the benefits to both economies and the climate are shared by the many rather than the few.'

And ICTSD chief executive Ricardo Meléndez-Ortiz added: 'A massive scale-up of use and diffusion of Clean Energy Technologies globally, and in particular to developing countries, is imperative for effective climate change mitigation and adaptation. This study provides evidence and key insights towards a better understanding of the challenges facing this objective.'

The project comprised three parts: a technology-mapping study of key CETs, a survey of licensing practices, and a patent landscape based on the identified CETs.

For the purposes of the study CETs are defined as energy generation technologies with the potential to reduce greenhouse gas emissions.

According to the study, patenting rates (i.e. patent applications and granted patents) in the selected CETs have increased at roughly 20% annually since the adoption of the Kyoto Protocol in 1997 with patenting in CETs outpacing 'traditional' energy technologies. The report argues that the adoption of the Kyoto Protocol 'provides a strong signal that political decisions setting adequate frameworks are important for stimulating the development of CETs,' and notes that the most intensive patent growth has been seen in solar photovoltaic, wind, carbon capture, hydro/marine and biofuels.

Not surprisingly the study found that patenting in the selected CET fields is dominated by OECD countries, although it notes that a number of emerging economies are showing specialisation in individual sectors and are thus providing further competition to the OECD dominance and potentially, it says, changing the future of the CET patent landscape.

The European Patent Office in Berlin

Six countries – Japan, US, Germany, South Korea, UK and France – are the main clean technology innovators, with the report finding that the concentration of patenting activity in these countries reflects patenting trends in other technology sectors. Accordingly, these six countries account for almost 80% of all patent applications in the CETs reviewed, with each showing leadership in different technology sectors.

But when CET patent data is benchmarked against total patenting activity (i.e. across all technology sectors) in a given country, other nations feature strongly in the patent league. For example, India features within the top five countries for solar photovoltaic and Brazil and Mexico share the top two positions in hydro/marine.

Unsurprisingly, the majority of activity in terms of patent filing trends between countries takes place in the patent offices of the top six patenting countries with China being the next most important patent filing destination for the top six countries.

The second part of the study, the licensing survey, was structured in three parts and addressed different elements of the respondents' licensing practices and activities, participation in collaborative intellectual property (IP) mechanisms and R&D activities, and finally it looked at licensing practices in CETs in relation to developing countries. A total of 160 key organisations responded to the survey, which was 30% of the sample size.

Overall the survey found there is little CET out-licensing activity towards developing countries among the survey participants, but that this level of activity is no lower than in other industries. Indeed, if the lessons of other industries are to be followed by CETs then there will be a number of hurdles to overcome in out-licensing - due to factors such as the transaction costs involved, identifying a suitable partner and the right licensing conditions. As the survey notes, the willingness to out-license is often much higher than the actual level of licensing and the findings suggest this trend will be even greater for clean energy technologies.

The report notes: 'This overall difficulty with markets for licensing may create particular challenges in the case of CETs, where rapid diffusion is needed. Thus there is a need for improving market conditions and encouraging licensing in the context of efforts to enhance technology transfer to developing countries. For the time being, where licensing agreements have been entered into, the main beneficiaries are actors in China, India, Brazil and Russia.'

On out-licensing activity the survey found that intellectual property (IP) protection in the country of the licensee was an important consideration when determining whether to enter into a licensing agreement, but that IP protection in the recipient country was not the only significant factor for licensing agreements in developing countries. Overall, the survey found that respondents attach slightly more weight to factors such as scientific infrastructure, human capital, favourable market conditions and investment climates, while licensing-intensive respondents attach much greater importance to IP protection.

Interestingly, 70% of respondents are prepared to offer more flexible terms when licensing to developing countries with limited financial capacity, with academic institutions and public bodies being more willing than private enterprises to provide accommodating licensing terms to developing-country recipients. And in terms of size, small and medium-sized enterprises are more likely than multinationals to offer more flexible terms. Additionally, most organisations favour collaborative R&D activities, patent out-licensing and joint ventures over patent pooling and cross-licensing.

Looking to the future, and the development of a clean technology patent landscape, the EPO has developed and launched a new classification scheme for patents in climate change mitigation technologies, starting with CETs. According to the EPO, this scheme will 'provide continuous, accurate and user-friendly patent information and thus help to improve the transparency of the patent system in this critical technology sector.'

While this report has provided a clearer picture of the CET development and transfer market it nonetheless has, as with previous studies, focused primarily on the supply-side perspective. Clearly more information is needed on the demand side of the debate and the study also further notes that a survey capturing the views of entities in the developing world seeking access to CETs is essential for a broader understanding of the issues at stake.

The study also recommends that future work and refinements are required to identify patented inventions that have been commercialised in the marketplace, reasoning that this would give a better idea of which technologies are working and inducing technological change. And, it adds that a study of patenting by publicly-funded institutions and universities would be important in helping to understand the source of new technologies and the role of government funding in their development.

Although this study has not provided all the answers, it was never intended to. What it has provided is a greater understanding on the geographic/demographic development of CETs and the limitations on transferring these technologies to the areas of greatest demand – the developing economies. Further work is required on CET transfer and further progress is required in this area at Cancun if tangible progress on climate change mitigation is to be achieved.

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