 Good morning. My name is Sarah Ladislaw and I'm a senior fellow here at the Energy and National Security Program. Welcome. This is, I think, gosh, the seventh installment in a series we're doing here called the Opportunity Tipping Point series, which is all about the policies, programs, and investments that expedite or hasten the transition to a low-carbon energy future. Earlier this summer we had a session called Game Changers and Visionaries and it really focused on sort of new breakthrough technologies, breakthrough strategies that were being largely employed by the private sector. It's sort of closely related to, we also talked about innovation strategies in that session a little bit, but this session we wanted to really devote to sort of questions of how different countries have approached or plan to approach promoting energy technology innovation and also technology transfers or the diffusion of technologies from country to country, from private sector into, or from the public sector into the private sector, those types of issues. We're really lucky, we keep calling this the Miracle Panel because we wanted to get this exact lineup of speakers and this is exactly who we got. And not only did we get them once but we unfortunately had to cancel the event from earlier this summer and move it again and we got them again. So those of you who work in Washington know that doesn't happen very often so we feel very fortunate to have this excellent group of panelists here today. What we're going to do is we'll let everybody kind of go through their presentation about 15 minutes each and then we'll take questions and discussions at the end. What we've done today is we've got we've got two speakers up front who are going to sort of talk about specific cases but also sort of the theory and give you some framing around the two sort of main issues for today's session which is comparative innovation strategies in different countries and also technology transfer issues. So first up will be Deborah Blevus who is a professor of energy and energy resources in the environment program at John Hopkins School of Advanced International Studies or more well known as CICE. And she'll focus on comparative innovation strategies in Brazil, Germany and Japan. She also is a specialist on technology transfer so she'll be able to sort of add her thoughts on that during the discussion portion as well. Then we'll got Michael Levy from who's the David M Rubenstein Senior Fellow for Energy in the Environment and the director of the program on energy security and climate change on the Council on Foreign Relations who's going to be talking about the work that they've done on technology transfer challenges and opportunities. And then on sort of the CACE study side we're really privileged to have Jaume Tan who's a project manager for China Climate Change and Energy Program at the World Resources Institute who's recently done some work on scaling up low carbon technology deployments, lessons from certain CACE studies that they've done in China. She'll share some of that research with us. And then finally Raquel Blaustein, am I pronouncing the last name? Rochelle. Rochelle Blaustein, excuse me. Senior advisor for technology transfer at the U.S. Department of Energy who's going to talk about U.S. efforts in technology transfer as well. So without further ado, Debra? Whichever you prefer. Okay. Please bear with me. I'm fighting a cold so I'm hoping to inundate myself with enough liquids that I don't break down into major coughing fits. What I'm going to talk to you about is a couple of things. First, this is drawn from a course I co-teach on policy to drive energy innovation which focuses on key countries both in the developed and the developing world. This is drawn from this case because people are addressing the U.S. and China. I'm addressing three other biggies, Germany, Japan and Brazil. What I'm going to first do is look at the key factors that we've identified that are needed to become a leader in innovation and then secondly address largely the unique factors, not go through down that same laundry list for each of the countries, but to draw your attention to some relatively unique or strong factors that are operating in each one of the countries. So first, what are the critical elements for innovation? Well, most of these are intuitively obvious, but you need a strong integrated government structure to support innovation and what we see throughout the West and also in developing countries is not an integrated structure, but one that is often very stove piped with little communication across sectors and this clearly inhibits moving forward on good innovation strategies. Obviously, you need good universities to train the innovators and to train the researchers and this is a strength in some countries and not as strong in others. High-quality research institutions is a critical factor and these can be research universities, they can be research laboratories, different countries have spun off different models. Very critical is very capable private sector institutions, companies, but could be institutions as well, that have two elements. They have R&D capacity and this is very important when you look at developing countries, but also the ability to carry innovation forward into products and services. So there are quite a few companies, again, that have very stove piped elements where R&D is done in one arm and it's really hard to see how that R&D actually carries successfully to products and services on a continuous basis. And then you need market push policies and these are the ones that sort of drive support R&D, but also drive the R&D across that famous valley of death, where you move innovation into sort of small startups and move startup companies into growth and maturity and wide-scale implementation. So market push really refers to the beginning of the cycle, but carrying it into development and market pull is creating the demand for the technologies. Obviously procurement policies, for example, is a good example of a type of market pull policy. Now I'm going to highlight, among different countries, what I consider to be their strengths amongst these. So looking first at the German innovation system, the first thing to say is that Germany over the last decade has really sort of come to the realization, as many European countries have, that they really need to sort of reinvest in their research systems and particularly into their energy research systems. And as a result, we've seen R&D spending from both the government and the private sector increase significantly. The priorities in terms of the government, no surprise, is first and foremost renewables. That has been the longest standing commitment of the government. More recently, energy efficiency, and then in addition, carbon dioxide, capture and sequestration, and mobility innovation. Basically, the hard to crack transport sector. Now among the innovation institutions, Germany has served as a model that has been copied all around the world, including in the United States. So early on, it made a major investment into its institutes of technology known as T9. The relatively recent Chinese effort to create institutes of technology is heavily modeled on the German program. They've also created and started to refine a program of research centers. And it used to be that you would talk about the research centers and you would mention that they're two big ones, the Helmholtz Association and the Fraunhofer Society, and then mentioned that there's a couple of smaller ones, Muck's Planck and Leibniz Association. But recently, we've seen much more of a centralization or clear definition of the roles. Now the interaction between the two is still not very clear, but the Helmholtz is really basic research. It's primarily funded by the German government, whereas Fraunhofer is primarily applied research, and there is government funding. But what's important to recognize is what they've called the Fraunhofer model, which predicates the receipt of government funding on actual contracts with private sector contacts. Okay, so that there's a clear effort by the government to try to move this research into the private sector. In addition, again, on the side of R&D, they've looked at this issue of the Valley of Death. How do you help create the conditions to allow for an easy flow of R&D into the marketplace? So there's assistance now for facilitating startup companies. There's increased emphasis on public procurement of technologies. There's use of standards to drive innovation, and innovation funding has been developed particularly for the private sector. What Germany is really known for is, and this can't be under-emphasized, really a very stable market pool set of conditions. So having served on some NAS panels, we usually highlight this. This has not been an environment of this year we're supporting this policy, next year we're not the following year we are. It has really been a very consistent marketplace that has very consistently, as a result, pulled technologies into the marketplace that may be having more difficulty entering the market in other countries. So obviously the ones that are most famous are the renewables ones such as the feed and tariff. But building regulations are increasingly looked at. Appliance and efficiency standards have been endorsed. Biofuels is another one people know has been a longer standing. Vehicular efficiency targets is a relatively new activity of the government. Procurement policy is relatively new. The whole issue of building energy efficiency and sustainability into national buildings, government buildings, is critical. They've created a building standard like an Energy Star program, I mean a building label. And then there's a series of subsidies and tax incentives for investing in energy institutions for energy investments in new and existing institutions. So this is the building label over here. And this is just an example. This is the fit, the feed-in tariff. And this is the example. The strategy of feed-in tariffs is that you're paying more for certain types of electricity generated by certain resources, but you reduce the amount of the payment over time on a very step-down, clear basis in order to try to drive down the price of the product and drive up the demand. Okay, so moving very quickly. The Japanese element. A few things that are very important to recognize because when you try to sort of say, well, we'll copy certain elements of the Japanese system, it's important to recognize the historical drivers of energy innovation. METI, everybody, you know, a decade ago, everybody talked about METI. METI doesn't exist anymore. This is the Ministry of International Trade and Industry. But it was the architect of industrial policy for the country. And it really was sort of a guidepost. Many would argue stronger than a guidepost on modernization, technology acquisition, investments in new plants and equipment, and also to sort of gauge what's happening in foreign competition and to help the industry move forward. It had a huge emphasis on R&D. And that has really left an imprint on the culture of Japan even though METI doesn't exist. The successor agency doesn't have nearly as a sort of a structure as METI did. But what I want to bring your attention to is the Karetsu structure. Again, something that's been written a lot about. It was developed in the postwar era. And Karetsu are basically a set of companies that are joined together in some sort of interlocking business relationship. The Toyota is a good example of a vertically integrated company where you have basically everything in the supply chain woven up into Toyota. What created controversy, particularly in the United States, was the horizontal Karetsu in which you really have a set of supplier institutions usually tied with a bank. And the most famous postwar Karetsu are Mitsubishi, Mitsui, Sumitomo, Fuyo, Daichi, Kangyo, and Sanwa. The Karetsu structure, again, doesn't dominate like it did a decade ago or 20 years ago. It has simmered down largely because companies have come up and begun to dominate that didn't grow up in the Karetsu structure. But again, the footprint, the imprint on the society still exists. And so it's important to recognize those two imprints. And clearly that also emphasized R&D. So what were the benefits of Karetsu? Well, it was a potential source of finance, obviously, since there was a relationship with the bank. Many would argue that it provided a strong protection against hostile takeovers, which has been sort of the bane of many startups that they're constantly looking over their shoulders, that they may be taken over, not in conditions in which they'd want to be. An integrated supplier framework and an integrated distributor framework that can't be minimized at all. And if managed well, Karetsu can obviate bankruptcy, which again is another issue facing many, particularly smaller companies. Energy R&D is a huge emphasis. And really in the Japanese government, the emphasis is really on market push, not market pool strategies. Government spending on R&D as a percentage of GDP is the largest among the IEA member countries. And as I said, market push is very important. What I'd like to do is look at a couple of institutions that have been created recently, relatively recently. NIDO is one, the New Energy and Industrial Development Organization. And it is an organization whose job is to sort of bring innovation to commercialization, to sort of nurture the process along. What I want to show you is, this is hard to read, but it's a process that shows how they see from research all the way to commercialization. If you can see these little, not the bullets, the flags, you can see that there's a very clear process of the government continuing to commit a level of funding along this path, although a declining percentage, a continuous path. So that is really very much the NIDO imprint. Just one quick element, the photovoltaic R&D, has really been an outstanding story of them bringing PV costs down. One key element of their research program is that they don't just look at the film, they look at the whole process. So while they've also been looking on developing cost, very cost effective amorphous silicon cells, they've also been looking at how to develop cost effective manufacturing technologies to produce the cells, and also the systems that would use these amorphous silicon cells on rooftops. Okay, and then very quickly the COOL Earth 50s program is a very new program was created in 2008. It's really the Japanese government's response to the threat of climate change. They've selected 21 key technologies to be given priority. What's important is they've created technology roadmaps with R&D priorities and performance benchmarks, which again is part of what is now we're seeing more and more in the US government. And one key element that I want to emphasize here is that the Japanese government really emphasizes the need to strengthen international cooperation on R&D as part of their overall R&D strategy. So very quick, I'm just going to run through this. You guys have the slides. This is a listing of their priorities within the system, within their COOL Earth 50s technology. Okay, and finally the Brazilian system. Now again, Brazil is very different from these countries. It doesn't have a long history of innovation. It has a relatively recent history. It doesn't have many of the elements. It doesn't have that wonderful T9 that the Germans have. It does have some strong universities, but it doesn't have the strength that you see in developed countries. Nor does it have this nice plethora of research institutions. And recognizing that they're, but they do have R&D capacity. There's no doubt about it. And one of the big challenges for Brazil is, as for many developing countries, is bringing the fruits of the research to market. And so one key element that they have focused on is the creation of what they call their Brazilian Innovation Agency, known as FINEPE. And again, it's a public institution within the Ministry of Science and Technology. And it plays a panoply of roles, starting from research institutions all the way to the private sector. It has identified key sectors, oil and gas, we can understand why, because of their deep oil and gas exploration activities. Hydro, they have a huge hydro capacity. Agribusiness, that's their biofuels program and transportation. That's the major source of greenhouse gas emissions in the country. Key funding has gone to Imbrapa, which is really the nonprofit research organization that has helped facilitate the biofuels revolution in Brazil and Petrobras, which is responsible for their deep oil and gas development. What's important to recognize here is again, they see a role along the entire path, just like NIDO, with different elements of intervention along the way. Grants at the beginning and then moving later on to loans, loan guarantees, information flow, etc. A key element I want to point out is the Inovar program, which was launched in 2002 and its focus was to basically help create venture capital. That's one of the strengths of the U.S. market. It doesn't exist in virtually all developing countries. It was co-funded by the Brazilian government and the Inter-American Development Bank, a very innovative role for the bank to have taken. The goal was to create venture capital funds and particularly to get pension funds investing in those venture capital funds. So far 25 funds have been created and also a seed market program has been created, which is really primarily grants to small entrepreneurs to sort of get their businesses going. They have a venture capital website that's seeking to sort of match between entrepreneurs and venture capital sources. Then very quickly, other innovative actors in the process, one is the electricity sector, which is not completely privatized but has gone through a process of privatization. One thing that has happened is that the regulator has required that the private utilities take 1% of their annual revenue and put it either into R&D or into energy efficiency. Half of that, half a percent or half of the 1% has to go to a new institution called CET Energy, which is focused on R&D in three areas. Diversification of electricity, again, sources other than hydro, they're very hydro dependent and that has proved problematic. Electricity in rural areas, they have some of the biggest challenges in terms of bringing electricity to rural areas and energy efficiency. The other institution I wanted to put focus on is again in Brapa, which is the institution of research into the agricultural sector which has stemmed, which has been the source of much of the innovation in the feedstock development for biofuels and particularly for ethanol. And they have worked very closely with state institutes and universities towards this end. And then very quickly, they have a variety of market pull strategies. The pro-alcohol program has gotten a lot of attention because of their ethanol commitment. They have a relatively new program, pro-info, which has had some growing pains, but the goal of the pro-info program eventually is to have about 10% of the electricity produced in the country by 2020 come from renewable sources other than large hydro. Okay, and that's it. Thank you. Thanks very much, Devin. I know you've got a series of other countries that you cover in your coursework routinely, so there's other interest in other countries. I'm sure we can cover that, too. Next, we'll have Michael talk a little bit about the work he's done on tech transfer. Thanks, Sarah. If it's okay, I'll speak from here. Well, thank you for the opportunity to speak to all of you this morning about technology transfer. I should give you a little bit of background. As Sarah says, this is based in part on work I've been doing with a handful of colleagues over the last nine months or a year focused on technology transfer and the big emerging economies, China, India, and Brazil. We'll be publishing the results in a large study and in a Foreign Affairs article in about a month or so, and so this is a bit of a preview of some of the ideas that will be in there. I should also note, as a matter of scope, that I'm focused on international technology transfer. There are other elements of technology transfer that may come up later in the panel. I guess as the first person on this panel who's saying something about technology transfer, I have to tell you a bit about what I think it is, which is sometimes a difficult thing to do. In climate change discussions and particularly in climate diplomacy, a technology transfer is often equated with discussions about intellectual property rights and with quite contentious discussions about intellectual property rights. Developing countries have traditionally focused on things like compulsory licensing and concessionary licensing as a goal in climate negotiations and developed countries along with firms in them have resisted fiercely. It's probably the least productive piece of a fairly unproductive set of negotiations, which says a lot. That's not what I want to talk about. It'll be part of what I want to talk about, but I'd like to look at technology transfer more broadly. Someone asked yesterday what I mean when I think of technology transfer my instinct, which is a genuine one but may not be enormously useful as technology transfer policy is a policy that affects whether technology is transferred from one country to another. Start broad and ask what are the policies that affect whether technology that exists in one country shows up in another. That's the basics of what technology transfer can include. Another way to think about it that may be a little bit more concrete is we just heard about innovation strategies within countries. All sorts of things that governments do to address shortfalls and what the market provides in terms of innovation. Well, in a global system there needs to be innovation tech innovation strategy that reaches across borders as well. So a big piece of what technology transfer strategy is as far as I can tell is filling in those gaps that exist at international borders in global innovation system. So when you look and ask is a government supporting commercialization of a technology within its borders from a small innovator to a bigger manufacturer, you have to ask is there a potential international counterpart that we need in order to do the same thing when the originator, the initial inventor is in one part of the world and the eventual employer or manufacturer is in another part. So that's another way and I think sometimes a very useful way to think about what is involved in technology transfer. The problem is that when you characterize it like that you can make this sort of intuitive economic argument well this is about fixing market imperfections and making things work properly. And the domestic level that's straightforward. You fix market imperfections as long as you can do it properly. It's a broad win for society. You have distributional consequences but that's politics. That you have to deal with politics. At the international level it's no longer just politics, it's strategy. You may fix market imperfections at the international level. The distributional consequence may be that the people who you represent in case the United States government, the U.S. economy can be hurt and other countries can gain as a consequence. So fixing market imperfections while it may sound nice in an economic sense may not necessarily always be the wisest strategy. And I'll come back to that a couple of times. But it's important to remember on the one hand there is this parallel but on the other hand the strategic and political context is quite different. I'm going to give you three broad points and then I want to talk about three elements of strategy. I think three broad points to keep in mind when you're thinking about technology transfer. The first is that particularly with respect to the major emerging economies, particularly with respect to the developing countries. The first is that not all developing countries are China. When we have discussions about technology transfer we often do one of two things. We either say we're just going to look at China or we say we're going to look at everyone but what we really talk about is China. And we use it as a proxy for everything. We make all our decisions based on China and that doesn't necessarily lead to optimal strategy. There are countries that have far fewer capabilities than China. There are countries that have very different strategies from China, very different circumstances. It's important to recognize that and build policy to that. And again, I'll come back to that. The second is that there is this fundamental challenge at the heart of technology transfer strategy. It's what makes it so difficult. There is this tension between competitiveness strategy, economic strategy on the one side, and climate strategy on the other. And if you think that you can deal with technology transfer policy without directly confronting that tension, you're going to produce something that doesn't work or doesn't make sense. So it's extremely important to keep that in mind when you think through technology transfer strategy. The third is that that said there are win-wins in technology transfer strategy or at least win-no-loses. There are areas not every gained by another country is a loss for the United States. I can tick through a variety of ways in which this dynamic can happen. One obvious one is when complementary capabilities to develop and produce technology are brought together through a more efficient system. In some of those cases, everyone can gain. If we are able to drive down the costs of technologies, governments become more willing to mandate them or to incentivize them. And in the case of essentially all low-carbon technology, most low-carbon technologies for the foreseeable future, there's going to have to be a significant government role in market creation. If we can create circumstances where governments incentivize bigger markets, all providers, even if they share of the market changes, have the potential to benefit. But relatedly, it's not just this sort of organic element. There's a negotiated element to it too. And in particular, in order to get something that works substantively but also politically in balancing these two sides, my suspicion is that technology transfer strategy has to combine efforts that expand markets and particularly that reduce barriers to entry into markets with active government efforts to promote the spread of technology. So developing countries have been asking for active government efforts for a long time. Firms and policy makers and developed countries have been asking for more market access. I suspect that the only way to make everyone happy is to grow the pie and do both of those things. So how do you go about doing that? Let me talk about three basic elements to a strategy. The first piece of a technology transfer strategy isn't actually in the realm of technology transfer proper. For the United States, it's investment in innovation. Why? If you're not investing properly in innovation, you don't have much of a discussion to have about technology transfer. It's not clear what anyone will be interested in having from the United States or what benefit the United States will have if it's not doing its own appropriate investment in innovation. There are a few basic reasons why the government needs to play a significant role at this stage. The market again tends to under provide innovation because firms can't capture the full value of investments in innovation, even if there's demand side pull. And second, in the current political environment, there's a short fall in demand side pull on top of things. And so that provides an additional reason for government to support market incentives. The other is that others and particularly others in the developing world, contrary to a lot of the popular narrative these days, are not making these huge investments in innovation, particularly at the cutting edge in the way that the United States traditionally has. China, for example, I'm breaking my own rule about using China as the canonical example. But I will. China is investing a lot, but its innovation is still primarily in the same sort of way that's existed in the rest of its economy. Incremental innovation focused on processes rather than more fundamental innovation. India, despite the image of being a country right at the cutting edge in certain high tech areas, has essentially has done very, very little on energy innovation. They're trying to turn a corner. They're trying to invest in a few different areas, but they don't have a proper innovation system. And it would be unwise to expect them to fill in the gaps. Brazil is another interesting case with real strengths in certain low-carbon sectors like ethanol and also agriculture, which if anyone wants to get into it later, I can explain why I think that's actually a very important low-carbon sector, but is not going to deliver in other areas. So again, to have a system that makes any sense, the U.S. is going and other developed countries are going to have to step in in significant ways with their own innovation systems. And those will have two parts. Those will have, those will need to have a market pull part and but also a innovation push side to them. Given that foundation, you have two basic pieces that I alluded to earlier. One is efforts to promote an open system so that the traditional commercial channels of technology transfer function as well as possible. And the other is more active government promotion of technology transfer. So there's three basic areas that you look at when you're thinking about open systems for technology transfer. One is for commercial technology transfer. One is systems for trade. The second is investment. The third is this classic issue of intellectual property rights. Firms regularly bring technologies to new countries through all of those channels. Firms will either sell complete systems or technologies into countries or the equipment used to make them. They can bring technologies at various stages through their own investment whether it's foreign direct investment or through joint ventures. They can license though often they're uncomfortable doing so. So all these all these pieces often do promote technology transfer. And though we speak about technology transfer often in negotiating discussions as if it's some of the governments do it. It is some of the firms doing governments create an atmosphere and environment for. And we're seeing very different approaches to trade investment and IPR in the three big emerging economies. In China I think it's fair to say has adopted a relatively hostile approach on trade on foreign trade investment and IPR in high tech areas. You see effort to push indigenous innovation strategy further with the imposition of barriers to the use of foreign products in a variety of different sectors but including low low carbon sectors. Barriers to foreign known companies particularly providing understate contracts even if they are locating their production in China. Efforts to use standards and preferences for for technology that include domestic IPR as ways to exclude foreign technology that creates a real disincentive for a lot of companies to play in China. And there's still plenty that are but there's increasing hesitance and even when country when companies still bring technology they may not bring it at the pace that is needed and they may not bring the sorts of technologies that are needed. And it's important to remember particularly in the climate context that's not just about whether technology ultimately makes it to a given country. It's about how quickly it makes in what sort of technology makes it there. It also creates a very difficult political circumstance here. If you want to argue for active efforts to encourage technology transfers very difficult to do it when you're talking about a counterpart that is seen as actively trying to undermine the system that you're trying to strengthen. And say India and Brazil are quite different. Again it's a mixed bag but the trends have been largely positive. If you look at and I'll just give a some some illustrative examples but India for example allows foreign investment in power projects with I think it's automatic approval for renewable energy projects if you've got seventy four percent or less foreign ownership and relatively expedited even if you have a hundred percent. In the wind sector they have a mix of tariffs that does prefer domestic assembly but allows a lot of foreign a lot of foreign imports. There's a mixed bag on supercritical coal. We can go into a lot of details but the trade environment is more positive. Investment is wide open. There tend not to be strong preferences against foreign owned companies operating the energy sector. And IPR is not seen as a broad problem but it is seen as a problem specific to particular companies. Brazil again similarly very positive trends. Elimination for example of the ethanol tariff recently changes in we look at wind across different countries in our study because it's something that exists in all of them changes in the last year on policy toward trade in wind technology because in response to a realization the past policies weren't working. Brazil had uniform local content requirements on wind technology until about a year ago and moved to a more a more nuanced approach in the last year together with changes in their policies to create demand that have actually been quite successful and you've seen the last year a flood of foreign wind manufacturers moving in to Brazil. So smart a smart set of policies. So this is the first very important component I should say as a last little piece on this what the United States does at home has a big impact as well. That's in part through the sort of demonstration effect is difficult to argue that others should reduce barriers if we are talking about increasing them but it's also much more of a substantive level. Technology transfer also happens when foreign companies invest in the United States whether it's jointly with firms or by purchasing them and keeping the system open requires that sort of approach from the United States as well. Last part is the active promotion side and I'd emphasize that active promotion of technology transfer has to happen in context of other countries adopting essentially friendly approaches to commercial technology transfer so it requires success on the first front but I'll highlight three areas that I think are important here. The first is addressing the role of small and medium enterprises. We have problems sometimes in our system here but they are much more significant in the big developing countries. In China you have a domination by large state-owned enterprises. In India for example you have a handful of large conglomerates that play an outsized role. They play important roles but you don't have that cutting edge piece and that high-risk, high-return piece that you get with small, medium enterprises and the flip side of small and medium enterprises here are less able to operate at the international level and to move the technology out there. So steps to address and to strengthen that piece of the innovation system can be important whether that's through joint insurance on intellectual property rights whether it's through efforts that facilitate contacts, matchmaking, information. India for example has proposed something called a set of climate innovation centers that might address this. It can also include basic things like trade trips that the US government promotes. The second and more difficult controversial area is in the demonstration and commercialization of clean energy technologies. We talk about the need for government support in that part of the innovation system domestically. That means that we should be thinking about that at the international level. If there's a technology developed here it doesn't need to be tested out in China in order to figure out how it works and to reduce risk. If there is a... We have these sorts of things. They are harder sells internationally because you can be potentially strengthening competitors. That's why in looking at that you need to have a few prerequisites the first being joint financial support but the second I think most importantly is tying this to the creation of an access to markets. The only way you can solve that tension is through that and I think the only way you can sell any kind of financial support here is by tying it to export and overseas investment promotion. Last piece on this is not is a sort of meta-piece which is you need good coordination on this. It's nice to say the United States should be able to move out alone on these things but there's rarely such thing as a US technology which makes it difficult for the United States to promote technology transfer alone and there are a lot of cases for example in the trade and investment front where the United States is not the only country concerned about the activities of a particular other country and we weaken ourselves by trying to address some of these things alone. So working through a variety of different institutions can be extremely important whether it's the sort of standard ones like the WTO or the OECD dealing with export promotion are new institutions like the clean energy ministerial process that's trying to do some of this harmonization. So bottom line there are win-wins you need to be careful about them but in order to really find the opportunities we need to focus on the key set of countries that matter and differentiate amongst them in a strategic way. Great that was excellent now that we've got sort of our overviews of the two sort of primary issues and some very compelling questions about those on the table I think we'll move on to the case studies that we've got and starting with Jaumei from the World Resources Institute to talk about the work that they've done on scaling up low-carbon technology deployment in China. Good morning everyone. Deborah and Michael have already talked a lot about non-China now I'm going to focus on China. Among the issues policymakers must address in combating climate change is how to quickly deploy and diffuse existing low-carbon technologies in developing countries. Even though developing countries don't bear little responsibility for historical release of CO2 developing countries now account for an increasing large share of CO2 emissions global emissions according to EIA's projection by 2035 non-OECD countries non-energy related emissions will be double the size of OECD countries relations. At the same time technology diffusion rates in developing countries is very, very low. We know that electricity technology and emission transmission technology has been around for a long time but it's still not widely diffused in developing countries especially among low-income countries. Because of this diffusion gap the UKFCO funded the WRI and Tsinghua University to conduct a research on how to scale up low-carbon technology deployment in developing countries. We look at China even though people don't like to talk about China all the time but we look at China's experience in order to identify some barriers or drivers of technology deployment. In the past 20 years China has transformed from a pure low-carbon technology importer into a global manufactured power of a number of low-carbon technologies. What's the secret to China's success and what are the lessons learned? Our research focuses on three technologies. Our research doesn't have any political agenda and it doesn't have any value judgments. We just want to tell a story. So we focus on three technologies. Today I will just cover one first technology supercritical and ultra-supercritical coal-fired power generation technology. This technology was first invented in the US in the late 1950s. During the first 50 years of the technology's history it was exclusively developed country technologies until China started deploying the technology. Today China is the largest SCI acronym is SC and USC technology manufacturer in the world. China has three major manufacturers Shanghai Electric Group Harbin Electric Corporation and Dongfang Electric Corporation. Each of these three manufacturers annual product is larger than any other country's total annual product. But I have to emphasize even though China is a major manufacturer power of this technology China has to rely on licensing or joint venture to get key technology. We can see the source of the technology for turn-by generator and boiler all three key components of this technology. China has to purchase production license all through joint venture to acquire key technology. So that's the point I want to get eventually is that China is still not a innovation power it's a manufacture power. The Chinese made SC and USC technology on average is 40% cheaper than those made in OECD countries. So because of this cheap product the technology is able to quickly diffuse in China. By the end of 2008 China has totally over 100 super critical and ultra super critical units operating in China. It's only next to the US. However, the US doesn't have USC only has SC technology. So how did China reach such a quick diffusion technology diffusion? Let's take a look at the China's approach. In 1992 China purchased the SC technology from the US. Back then the technology was extremely expensive for China because China back then was a poor country. So the central government decided to localize the technology so we can reduce the cost. Then the first step the government took is to start a feasibility study and project planning. It took five years to finish this process. And finally the government realized that China is able to manufacture localize that technology. China has the technology capacity and has the need for that. So localizing super critical technology was written in China's 10th five year plan become a national priority. And then afterwards the government also set up a collaborative research team including major universities, research institutes and several manufacture just companies that's involved. After three years collaborative research we call technology decoding. In 2003 China started the manufacture first the SC unit and after one year's manufacture in 2004 China successfully operated that technology. And it was in Huanan's Qingbei power plant. So we can see this approach is very very deliberate and also very very systematic. That's China's way of technology deployment. In this process government's policies mainly work in two directions. One is front end R&D support. Government's R&D support at the central level is channel the three programs. First is national basic research program and we also call the 973 program that focus on basic research. The second is national high tech R&D program. We also called 863 program. It's focused on applied research, applied science. And the third is national key technology program that's focused on deployment. And in addition to central government's R&D support programs at the provincial levels lots of provincial governments also have corresponding R&D supporting programs. For example Shanghai Key Research Projects really helped China to manufacture the key special materials for boiler for SC and USC boiler. So this is from R&D perspective. And the second policy approach is back end policy pool. That many represented through two approaches. One is incentive policies and then regulatory mandates. Incentive policy is that if you purchase domestically made SCUS technologies you get tax rebates. And also at the same time in addition to incentive policies government also mandated that from 2006 any newly built coal fired power plants that's equal to larger than 600 megawatt has to use supercritical or ultra supercritical technology. At the same time government also closed down a number of small and inefficient coal power plants. Because of the widely diffused of supercritical and ultra supercritical technology and China's energy efficiency in the coal fired power plants has improved dramatically in the past six years. So I summarized China's technology deployment approach and come up with this figure. You can see that China seek clean technologies through three measures. One is licensing, second is joint venture, third is joint design. Through this technology transfer and China started technology decoding. After decoding China manufactured the technology and the manufacture lead to significant cost cuts and the cost deduction also finally lead to technology diffusion. Then China's success in technology deployment and diffusion however hasn't led to China's innovation power. We can see that in the past now we all know that China now is one of the major manufacture of wind turbines in the world. But in terms of technology, the speed of technology we can see there is still a huge gap. The green light is the time of first application of wind turbine technologies in the world. And this, the light green light is the first application time in China. We can see that for 600 megawatt wind turbine the first application in the world is 1994 but in China it was 1998. So the difference was four years. And when the 600 megawatt wind turbine became a mainstream technology in China that was 2001. So we can see this gap between China and the best technology in the world. Also we can also see that this is data showing that in the third quarter of 2009 the pattern application in China so related to wind turbine technologies. We can see the top three applicants are all foreign companies, not Chinese domestic companies. That's all this data. Also from very beginning might research. For the SC and USC technology we can also see that all the technology sources come from foreign companies. So China still has a long way to go in order to be innovation power eventually. So finally I leave some questions for Haqqiao maybe she can answer how to be an innovation power. Thank you very much. Excellent and finally we're going to do another case study which is the United States. Well I'm very excited to be able to share with you today. Some of the threads that I see weaving through the evolution of tech transfer and innovation in the United States. We have some fairly ambitious national priorities which include energy technology and very much encouraging entrepreneurship in the high growth and innovation based sectors. The some of the things that we've heard this morning including market fixes are some of the things that we're doing in connecting the dots. The connecting the dots is what I like to refer to as one of the threads that I see. We're getting a better understanding of how to go about the aspects that are required for both policy and implementation in an innovation ecosystem. Under the advanced vehicle technology strategies that we've had we have seen $2 billion in grants to catalyze the private sector investment to help build the battery and electric drive component industry. We've also seen in helping the market pull tax credits to the consumer. We've seen $400 million of investment and we heard how important it is for investment by the government for electrification of the transportation system. And we've also seen considerable loans for advanced vehicle manufacturing. All of these things help move the innovation of the technology. Now tech transfer is as we've heard very much an important part of the innovation ecosystem. Innovation is part of tech transfer as well. We have an important research integration to do with the engineering that we have and some of those research integrations is part of the connecting of the dots that we need to do. We also see accessing information on federal resources is a very important aspect of how we are weaving the innovation ecosystem through tech transfer. The federal laboratories and the departments of the US government are increasingly coming together to share information and best practices with each other but also to pull together resources and information that are useful for the business consumers, the entrepreneurs, the small and medium sized businesses who will need to innovate. We have over 700 federal laboratories that do R&D, many of which are very much involved in the tech transfer and innovation and of course increasingly energy technology is spilling over far outside the department of energy, DOD, USDA, any number of agencies are involved in some aspect of energy technology. The collaborations that we see coming out of the federal laboratory are over 20,000 active collaborations a year and that is increasing. We also have a number of laboratories that do sponsored research at the National Renewable Energy Laboratory of the Department of Energy, for example. We have test centers for testing wind turbines and things of that nature. We have a wonderful solar testing program there as well and we have microcomputers that also help with simulating the technology development to try to reduce the transaction costs of moving something to the marketplace. We have technical assistants that's available to small businesses in many of the states in which the DOE has national laboratories. The USDA also has an extension service and NIST has a manufacturing extension program. These are technical assistance programs that are being beefed up for those that have already existed and potentially additional extension type programs would be established as well. All in the mode of connecting more dots, helping the small businesses, the medium size and larger businesses. We definitely, especially when you're talking about certain aspects of the energy sectors, definitely partner with the larger companies. Smart Grid projects, for example, go across small, medium and large businesses the infrastructure there, the type of investment that's required is clearly something we wanna be able to work with large businesses as well as small business, although of course we have a mandate to work with small business. And it's also important in building the economy and job growth, 20% of the firms that do business the firms that do business are the small entrepreneurial type businesses and we get 18% of job growth from that 20%. So we don't wanna ignore those. We also at the Department of Energy have something that we call user facilities. These are facilities that are available for businesses and researchers at universities to come in and use facilities that are unique. These are expensive facilities, computer facilities, testing facilities, we have accelerators that any company or university would not be able to expend the kind of resources to build and these are also accessible. This is something that all of these aspects of working with industry help accelerate the technology and we are working not just at the Department of Energy but across the departments and agencies to make better known the resources that are available and they can be used in multiples. It's absolutely possible for an entrepreneurial company for example to license a technology that has come out of one of the laboratories and then come back and work with the laboratory to move the technology to use the resources, the expertise of the scientists who were there to continue developing and reduce the risk of deploying a particular technology. We work with venture capitalists. We work with companies that are venture backed very important part of how we do business. One example of how we're integrating and connecting more of the dots is a program that was started at NIST, the Small Business Innovation Research Grant program has been in existence for some time and at NIST they began to use the SBIR program to set aside some funds to match the grants up with technologies that could then be spun out of the NIST labs so that here we were adding yet another layer of federal resources to help connect the dots to transfer the technologies and NIST is focused on a broad spectrum of technologies. One of the technologies that they early on did this they started this program in 2008 was an LED technology as well. So the energy technologies that are benefiting from the increased access and integration of the federal resources go beyond the department of energy. Several other departments are already committed to moving this. We've got the department of transportation, NCI at NIH and the department of defense and the Navy specifically are looking to institute this and a number of other departments are considering how we might do this as well. So one of the threads that's very exciting is this connecting the dots. Within connecting the dots of policy and implementation, market pull and all of that, we had the accessing of both information on federal resources and the federal resources themselves. One of the most exciting things I think that the United States is very well suited for is the open innovation models and there are many open innovation models and it's not entirely new. A decade or so ago, Eli Lilly spun out an organization, they called Innocentive, it was in the health field but it was a way of opening up, getting past the not invented here syndrome, finding some ways of dealing with the tension of intellectual property rights in an open exchange of ideas and accessing answers from people around the globe to the questions that they had right within their organization. What came out of that was some mixed results but what was really fascinating is that not only were they able to train people to ask questions in a way that allowed the asker, they called them seekers to put out a question without giving away too much of what the company wanted to do in terms of their business trade secrets but they were able to structure it so that there was an intermediary and anonymity so that the folks who were providing the answers could submit them and then if they were selected then there would be a connection, non-disclosure agreements were signed and remuneration could happen. There are a number of other organizations that have come and tried to do similar type models with perhaps a little bit more success and recently the economist has begun looking at some of these things in an ideas economy series of conferences that they've put together where they brought people from all over the world together to take a look at how we might be able to get past some of the challenges that the intellectual property rights present in having an open exchange of ideas, something as I said before I think the United States is very well suited to do to have this open exchange of ideas. So the open innovation models that the Department of Energy is currently engaged in are the energy frontier research centers that we've had around for a little while. That is focused on some really key barriers to scientific advance and bringing together folks from different disciplines across departments, across institutions, looking at it in an open innovation model to get past some key scientific challenges. We've got 46 of these centers around the country. Most of them are centered in universities but not all of them. Some of them are in DOE national labs and other types of research institutions. Creating one of the other things we heard about earlier was the importance of having a really robust structure for R&D in a country. Energy innovation hubs is something much newer for us. We've got three of them that we've recently launched. We're looking at computer modeling and simulation for nuclear reactors. Again, something that is going to bring down the costs, bring down a lot of the risks in moving forward with a long-term solution. We're looking at using sunlight for fuel, another important advance that is bringing together folks from multiple disciplines, multiple organizations across the country. And we're creating centers, hubs, people in remote locations really moving us into a 21st century model of open innovation. We are also working with ARPA-E, some of you may be familiar with. It's a relatively new program, though just a couple of years old. I think we're in the second funding cycle now. Looking at real paradigm shifts for energy technologies. These are not necessarily incremental changes, real paradigm shifts. It's a competition and the competition itself is fostering real idea growth and bringing people together so that even the projects that are proposed and not funded by the DOE are so well thought out that they are getting venture backing even without the government's support. So the competition itself there is something of value. What I don't have on the slide, later this week we're going to hear what the awards, who received the awards for innovation ecosystem grants from the energy efficiency and renewable energy part of the Department of Energy and that will be very exciting as well. So we're really looking at innovation ecosystems and that competition potentially could have some of the side effects, the good positive effects that ARPA-E had as well, even potentially for those who did not receive funding. At DOE we're also working to deploy technologies and get over some of the gaps that we've seen historically. We've just instituted a phase three SBIR program to assist those technologies that had phase one and two funding from the department to move forward with additional capital so that they can get to the commercialization. Entrepreneurs and residents are something that we've done for a couple of years and now some of the labs are doing it on their own. We've invited venture capitalists, serial entrepreneurs into the laboratories to take a look at the technologies that we have to talk with our scientists to really begin to develop relationships and it's a different kind of open innovation model and then take those technologies, assess them and then either spin them out themselves or potentially have the analyses available for others to spin out. We have other more specific pilots that we're working to accelerate deployment of technology where I'm working with a university to bring down some of the transaction costs in looking at technologies specifically in the energy sector. We've recently had a patent landscape completed and will be published soon in a peer-reviewed scientific journal on algae as feedstock for biofuels. We're looking with the university to layer other technology landscapes, market landscapes, regulation of policy landscapes, potentially internationally on top of that and then in conjunction with other departments that are already working together, take and layer on top of that the federal assets that we have so that we can start looking at white space to see what technology development needs to be done really to move an industry or a product line to the marketplace. It'll also hopefully assist us in identifying much more easily good partnerships, appropriate relationships that can happen and even potentially bring together consortia. We're also working in tandem with that on unrelated projects to develop ways that would allow consortia to develop more organically in conjunction with our national laboratories so that we can reduce the time to market and accelerate deployment of technology there as well. We've got laboratories across the country. This certainly helps that and we've already had a number of successes in the energy field as well as outside. We've got coming out of Argonne National Laboratory some major wonderful work on improving batteries for hybrid electric vehicles and we've got some amazing advances in solar cells that a company in Albuquerque is very successfully deploying based on technology that came out of the National Renewable Energy Labs in Colorado. I fully anticipate that we will move and evolve more into 21st century modes of operating and really taking innovation strategy and making that a key component in tech transfer. We've evolved far beyond the notion that tech transfer is just licensing technology that serendipitously came out of basic research programs in laboratories and universities and there are a lot of very good minds both in the government and in the private and non-profit sectors really putting their heads to the best way to access the information, access the resources, to connect the dots in as many way possible, reduce the transaction costs and really work on open innovation models because exchanging the information is going to be very, very key more so than ever. Thank you. Thank you very much Rochelle, that was fantastic. We've got a good amount of time for some discussion and while you're all thinking of questions for our panelists I thought maybe what I'd do is ask a question of my own for anybody on the panel really. You know, it strikes me when we were thinking of the session and then also as you all were speaking technology, development, innovation, strategies, technology, transfer, none of these are particularly new issues as things that companies, governments have worked on for a long period of time. It's sort of within the context of our current energy and climate challenges that we're really looking at how fast can you push innovation? How much can you expedite sort of development and deployment of these technologies? How widely can you diffuse them into different markets? And really gets down to the heart of the question about transitioning to a low carbon economy which is how fast can you do these things and how do you overcome those barriers? And I was interested in sort of the tack that Michael took in his discussion of technology transfer where you get to the issues of strategy, right? This is not just about how you do these things in a mechanical way, it's about countries and interests. And for much of the time that we've been talking about climate and energy strategies in terms of reducing greenhouse gas emissions and energy consumption, a lot of the global models or the sort of academic assessments we do is about how to work efficiencies into the system and drive technologies into market as quickly and as cheaply as possible. But then when you look sort of on the national level within the political context, it's about being a winner in the technology race. It's about being the deployer or the generator of the next big technology, the home for manufacturing of technologies and exporting them into markets. For all of your expert views, I mean, how do you reconcile these two views of the world and of innovation strategies in general? I mean, does this sort of bent on competitiveness and job creation do something to slow down this innovation process or are there potential wins to be had from both perspectives? And anyone who would like to take a first shot at that is welcome to. I'm happy to take a quick stab at it. First, I think it's actually potentially worse than what you described because at least in the energy space, you often hear the argument on technology transfer that says, well, most of this stuff is in the private sector, we let it all happen, it'll be okay. We might not be able to get support for speeding it up, but at least we don't need to worry about slowing it down. The more the government gets involved in promoting innovation, the less tenable that answer will be because the government will by default have a stake, a legal and financial stake in a lot of these different innovative activities. Now I think it's still necessary for the government to be in that mix, but it introduces a host of more difficult questions. So for example, you can't just say, well, you can license or buy IPR if you feel like it, and it's a private transaction if the government is a co-owner of that, for example. So I think that's the first point, and that's not just a dynamic in the United States. The more intervention there is on the promotion side, the bigger trade investment IPR issues you may run into. That said, what's the sell? The sell ultimately has to be that unlike with a lot of other technologies, these are technologies where the market is not guaranteed. The discussion that we have, the sort of who will win the clean energy race, assumes that there's a clean energy race to be won. It assumes that the markets and the demand are out there. And it's not clear to me that, or I should say it is clear to me that the United States can't bring the cost of these things down to a level where we are going to create these huge markets all by ourselves. So we can win a race for a little pie. That doesn't sound all that exciting. Take a look at solar, for example. We've seen this emerging fight over the last week over Chinese solar, solar subsidies, but in general, the movement of parts of the solar value chain in China. Well, what you see is the movement of the relatively low-tech parts, the value chain of China, which could be a bad thing at some level because some US companies don't get to play in that, but it also brings down the cost of solar, potentially increases demand for the products that the US companies are producing in the higher-tech parts, the value chain, and wafer manufacturing, and then ultra-pure silicon. So there are potential win-wins if this kind of global diffusion happens in the right way. And if we're able to understand how that works, it's a more difficult story to tell, and that ultimately makes things more challenging. Just a couple of comments. In the traditional way of saying that governments are focused on this purely from a competitiveness point of view, it is true, we're sunk before we even start because clearly what we've been talking about is the need to address global problems and you can't solve them on a country-by-country basis. The comments I would make is, first of all, many international companies have already realized that you can't just be gleaning the products, the innovation capacity in the United States. They've integrated capacities across countries. And I think that there's a paradigm shift that governments have to go to. One of the things that strikes me, for example, is if you just look, just on OECD governments, people are putting lots of money into solar, into energy efficiency, there's a lot of duplication. If you take the climate challenges seriously, there's a lot of duplication that we can ill afford. So looking creatively beyond just sharing information about how you can, quote, jointly support or at least separate out certain elements that would go to amongst different countries is important as well. The last comment I would make is, again, if we're taking the climate challenge seriously, the problem is principally in the developing world. The new buildings are gonna get built in the developing world. So it's wonderful if the US wins the high-tech building award, but that's not gonna answer the problems in the developing world, same thing on transportation. And certainly on some of these big technology issues like coal and how to produce a much more cleaner burning coal, again, the demand is going to be in developing countries. So the challenge for governments is really how to break down those barriers of competitiveness or at least redefine what competitiveness is so that they're recognizing the innovation that multinational corporations have already embraced. While most of what I do is focused on moving technology from the federal laboratories to the private sector, that's only a piece of the puzzle. That's not the whole puzzle. There are any number of roles that the government plays including in the United States helping create some of the market pull with tax incentives to the consumers so that we can accelerate technologies. It assists the manufacturers and the innovators in the United States to move those forward. I think the comments about the developing world are very well taken and it doesn't mean that we can't find good ways of sharing our clean energy technology with the developing world. We need to find the business models that the countries can use, policies that are in alignment so that the folks we have here feel that the risk is worth the gain as well as the political risks if we don't do it and the climate risks if we don't do it. Everything we've talked about here this morning is very much a balancing act. We have incentives that are critical in terms of intellectual property rights whether it's in the United States or anywhere else in the world and those rights need to be there in order to incentivize the kind of enormous investment that's required in the energy sector. We need to take that into consideration. We need to take into consideration on a national scale the importance of maintaining and increasing what we have but I don't think that it's a zero sum game. I don't know that anyone, I've heard anyone on this panel have that implication. I think we can all have a piece of the pie. It doesn't necessarily mean equal pieces but we may all have a piece of that pie and ultimately all benefit from it. Okay, I would like to follow up on their points about women's situation. If we look at the global low carbon technology innovation chain, we can see that the US and several other OECD countries are actually at the forefront of the innovation chain. Historically, high income countries are always the players of breakthrough technologies and then poor countries at the lower link of the chain they try to adopt technology and eventually deploy and diffuse technology. Eventually they may be catch up to be one of the innovators but it takes time. So we come down to the theory that is China and OECD countries can both benefit from this innovation chain. Other countries, the US create technology and China is able to manufacture and bring down the cost and eventually the entire developing world can diffuse that technology. I think it really benefits to all the countries and to the climate. Hi, I'm Nick Welsh with the Global Carbon Capturing Storage Institute. So it's been a very interesting session this morning. This is an institute that's set up very much in the international space and I am curious, I certainly believe as many of you've said that there is a shared common interest there but there is a backdrop of political, economic and commercial interests as well. For that particular technology and an area given we're in a very much around proving the demonstration phase of the technology, what insights do you have that you can share from the countries that you've been looking at and talking about? All the governments we've been referring to with exception of Brazil are members of the institute together with a lot of non-OECD as well as OECD governments, major corporations and some non-profits. So it's really, the question is looking at that particular area, what do you see are useful insights for us to consider in dealing with the challenges that we have? I can have a go at some of it. Firstly, I mean CCS is a special case where innovation is never going to create demand. By itself, which is different from pretty much all of the other low carbon technologies. There ultimately will have to be government pull and I think that an uncertainty over that ultimate government pull it makes it even more difficult to incentivize private investment in innovation in that area. So I think that's the first important thing. The second is that different countries will have very different approaches to openness and to cross-border cooperation on demonstration of CCS and related technologies at IGCC in particular. You can look for, and different countries will have different capacities to mobilize the money that's needed to do these things. So you can look at the three different IGCC, CCS demonstration projects in China and some of this is domestic technology, some of this is in cooperation with international partners and with access to international, technology is actually a fairly flexible approach with money available. That as I understand is generating already technology that may be demonstrated in the United States relatively soon. So you can also see that things moving in multiple directions, India in contrast has had a very closed approach to IGCC demonstration. It's still just getting its first sort of 100 megawatt plus plant off the ground. What, 30 or so years after the United States but in part because it has not wanted to touch foreign technology, USAID tried to encourage them to look at different foreign options, did assessments of alternatives and Indians in general thought that this was a way to scan them into buying US technology. So they favored a state company and right now their biggest demonstration plan is like 6.2 megawatts or something. So you get different attitudes, again depending on the industrial structure in the countries, depending on the money it's available and depending on the specific challenges that are out there. But the other thing I'd say that is helpful for CCS is that so far away from commercial application that some of the sensitivity is a bit lower. Some of the worries about helping your competitor are a bit smaller because people feel this is way off down the road. And the connection to concerns about trade and openness are also different because you're not so worried with CCS but whether you'll have market access next year, you're worried about whether you'll have it in 10 years and who the heck knows? So you don't want to hurt yourself now because of that situation. Yes, I'm Philip Hughes from the White House writers group and I'd like to explore a detail of Ms. Tan's presentation that struck me as intriguing and may tell us something at least about the past of technology innovation and diffusion. In the SC and USC cold generation technology case that you described, you mentioned that this was technology developed in the United States and that the US actually has the largest number of units, at least SC units actually deployed, China the second largest number and the only USC units evidently. But all the companies that you listed in your presentation as the JV partners or licensees of that technology with their Chinese partners are not US domiciled companies, ABB, Alstom, Mitsubishi, Mitsui, et cetera. Now admittedly those companies have US subsidiaries and I don't really know what the ownership structure of this technology is within those multinational companies. But how is it? How did it come about that a US developed technology ends up being the intellectual property of a bunch of non-US domiciled companies who in turn are either the sales people of that technology back to the US for those plants you described and the licensees or JV partners for the developments you were describing in China? What does that tell us about how this all works? Extremely important question. We ask ourselves all the time. I think you should ask the US policy makers. The thing is, if we look at, based on the three technologies we studied, we realized that the US companies really don't benefit from China's technology boom at all. European companies and Japanese companies really benefit a lot. For every USC unit China manufacturer, China has to pay over one million license fees to those companies. They don't need to do anything just by getting the license fee and the loyalty through every unit China sell. They make huge profit but not the US companies. So I think for the US, the US first invented the technology and eventually those technology are really developed and matured in Japan and in Germany. The US policy makers should see how, should reflect why the US cannot benefit from China's boom. So a quick comment, just because you're not collecting licensing fees doesn't mean you haven't made money off your technology. If a foreign company buys your technology and then decides to license it and make money, you still benefit. So there doesn't need to be a continuous connection between the different pieces. Hi, I'm Peter Hyde. I'm just an interested bystander. I think I have a question from Ms. Blaustein. With regard to nuclear, you mentioned modeling and bringing down costs and so forth, but with the financial challenges that are extant in the banking and investment industry, to what extent do you see perhaps that the generation of new nuclear or the building of new nuclear or the second wave nuclear two to provide large amounts of megawatts with a relatively small carbon footprint? Is it possible that the industry will have a resurgence or are we, is it gonna be leapfrogged by new technology? I think it's important for us to look at both pieces of that. I don't see us ignoring the possibility of leapfrogging technologies, whether it's new technologies in the nuclear sector. One of the things that is interesting, we have some technology on mobile nuclear reactors. It's not something I would certainly have predicted five years ago that that was even possible. Will that kind of scale difference bring the costs down? It's certainly a possibility. We don't have a guarantee though. And looking at a portfolio, whether it's just in the nuclear sector or across the energy possibilities for short-term, mid-range and long-term paradigm changes, I think is important in part of the strategy that we have. I'm Mitzi Wertheim with the Naval Postgraduate School. I wanna expand this beyond just innovation. The talk in the city is we need innovation so we can create jobs. And it seems to me one of the issues about creating jobs is manufacturing our innovative activities here rather than creating something that you then send overseas. Andy Grove did a cover story in the July 5th issue of Bloomberg Business Week about creating American jobs. And it said we have to bring manufacturing back into the United States. I happened to agree with that. And then he went on to say we really need to create a jobs economy. So this is all about how you think about this stuff. And if you think about it only in that stovepipe or that bend section of creating new things, you don't think about all these ripple effects and the consequences of the choices you make as you go down this line. My father was an inventor at Bell Labs. He was a Bell Labs pioneer. Turned out he had three inventions every year. I mean, that was the average by the time. But it was a controlled place and they invented it there and they invented it at Bell Labs and they also produced it here, which created jobs. But if we keep sending this stuff overseas to be manufactured, you're not creating the jobs here. So that's the question. And it kind of goes along with the first thing that we were talking about is if the focus is on job creation rather than innovation, what are the appropriate benchmarks for someone who's supposed to be looking at the pace and scale of innovation as opposed to the job creation aspects of sort of the larger challenge? One of the things that the Department of Energy has been doing for longer than this current job discussion is looking at both manufacturing in the United States of the technologies that we develop, but also the net benefit to the United States. Sometimes it doesn't make good business sense to require somebody to manufacture in the United States because they may very well walk away. Sometimes a company may already have manufacturing plants in the barrier to entry in the United States to build that plant might be very large. And there may be other benefits that the United States could get and we do enter into those negotiations. Sometimes it's a matter of having research and development facilities here, which creates jobs, even if it's not necessarily direct manufacturing jobs for a particular product. There are other kinds of jobs even if it's part of the innovation economy rather than the manufacturing economy that we do take into consideration, but that has a longstanding interest of the Department of Energy to go beyond what was required of the by statute to manufacture or to get a net benefit to the United States. That is always attention, something that needs to be looked at in the context of things like climate change and the kinds of financial requirements to build things, but some kind of a net benefit, even if it's not manufacturing in the United States is of extreme interest in building the job base. I was gonna say something about the manufacturing piece because you alluded to it in your original question. I think we end up with very distorted policies if we equate job creation with manufacturing. Manufacturing is important. We shouldn't be doing foolish things to hurt it, but equating job creation with manufacturing is very distorting, I think in ways that have just been alluded to. Again, let's take the solar panel example. Also, services shouldn't be neglected. We can spend a lot of time focusing on module manufacturing in China that would support jobs that are below the US minimum wage, or we could see people making a lot of money figuring out how to finance rooftop installations in ways that make things work for everyone. I mean, that's another place one can make money and create jobs. So just looking at who stamps the thing at the end as the US-made product, I think ends up with a overly narrow view of how you create jobs. And I think the Andy Gross story is a really great example. He talks about his solution if I remember correctly, which was essentially to penalize any company that moved any job overseas. What happens if you need to move one job overseas so that you can have three jobs sustained in your company here because you're producing a product that is cheap enough for people to buy? And the alternative isn't always more jobs in the United States and more high wage jobs in the United States. The alternative may be not to have the industry at all. And I think that we need to keep that in mind when we look at these different supposed solutions to these problems. Let me just add on that. You know, one of the strengths of the US economy is to put services, attach services to products. It's something that is not a strength in many other economies. So for example, there have been a lot of efforts in Europe and also in developing countries to try to learn from the US example of energy service companies some more successful than others. And things like that that can mobilize first of all, greater activity by energy service companies. We still have a very smart, they operate in a very small sector in the United States. But also that's a strength of the US system that can be transferred and create jobs working in other countries that doesn't exist today. Okay, one more point. Actually just tilting a bit the other way for a moment. I think several of us have made this argument that often when manufacturing moves overseas there's still, if it's part of the right process that can be a net plus. That doesn't mean that manufacturing moving overseas is always a good thing. And in particular, when manufacturing moves overseas as part of unfair industrial policy by other countries or because of neglectful policy on the US side that is not a good thing. And one of our challenges I think is that policy that differentiates between situations where competitive advantage stems from genuine comparative advantage which we should be happy about and situations where it doesn't. And we should be looking seriously at steps we can take to try to correct that. And you see again that in the developing world particularly in China but also in clean energy spaces in some other countries. So India for example, as part of, I keep coming back to solar for some odd reason but as part of its effort to really grow solar its national solar mission trying to do 20 gigawatts by 2022 has put on some non-trivial local content requirements. Now on the one hand, more market access is good. That's not an appropriate sort of competitive policy so we might think about pushing back. On the other hand, it may be a political prerequisite for creating that mark in the first place. So there's a tough line to walk but there are these situations in a variety of countries where there's an inappropriate tilting of the playing field rather than an appropriate natural evolution. Thanks, I'm Jonathan Schreier from the US Department of State, the policy planning staff. This is really a follow-up to the question that Sarah opened up with which is in structuring international cooperative technology partnerships, joint efforts to develop new technologies and get them into the marketplace. Are we better off closely linking those to our interests in the major climate change negotiations, the UN Framework Convention on Climate Change Negotiations or are we better off totally disassociating them, one from the other? And what I mean is, for example, if a country is key to the outcome in the framework convention negotiations on climate change, should we emphasize partnerships with them to try and win them over to some desired outcome in the negotiations? Should we penalize them if they're being difficult in the negotiations and not emphasize a partnership with them or enter into a partnership with them because they've been so difficult? Or are we, and that also tilts us towards, if we take either of those kinds of approaches, it tilts us towards a focus on the countries that are most crucial in those negotiations, which might mean we might miss out on partnerships that are beneficial from the global perspective of developing the best technologies fastest. So for example, we might emphasize partnerships with India because they've got lots of scientists and engineers and a big carbon footprint and de-emphasize partnerships with Israel where they have lots of engineers and scientists but a small carbon footprint just because of relative size. So how do we manage the relationship best between technology partnerships and climate change negotiations? Well, first of all, from my personal opinion, linking it to good behavior on the part of the country, I wouldn't necessarily endorse. I do think that this preoccupation with the BRICS has, and wanting them to do the right thing, has caused us to ignore some key countries in innovation. And a real obvious case is Korea, which when you're in developing countries, the Koreans have been brilliant about introducing their products. They have to be a critical part of the innovation discussion. Another one, which is a big favorite of mine is Chile, which very quietly is doing some very interesting things in trying to establish a base, a renewable platform base. So my general comment is I don't necessarily endorse for obvious reasons, linking to good behavior, but I also endorse looking beyond the obvious big three or if you wanna put South Africa in that mix, that there are some very key pieces, certainly in the export element but also in sort of developing interesting industrial policy that should be included in that mix as well. Let me start by observing that if you would have held this panel a year ago, it would have been titled something like comparative innovation technology transfer approaches to Copenhagen, okay? And we wouldn't have gone an hour and 50 minutes without talking about the UNFCCC. So it's a different world, which is just an interesting thing in itself. A few basic things, if you can get more progress by doing things in the context of the negotiations, that's great and I think the climate innovation centers are one example where we may have some progress there. That said, once you tie things into the negotiations, as soon as something starts to be, there's this perverse dynamic, as soon as something starts to be potentially successful, it becomes a negotiating card and then you hold it back. That's an unfortunate dynamic. A second piece where you might have some utility in the negotiations is on a technology for adaptation, which involves a larger set of countries, actually may involve some more classic technology transfer issues or things like drought-resistant crops and will not have IPR issues that are similar to those for HIVAs rather than to those for low-carbon energy. As far as the sort of playing favorites, I actually do think you need to do some linkage and I think there is some value to cooperating with those who are cooperative. Again, we spent all of last year trying to figure out how to deal with China to the exclusion of dealing with others. And you would go to India, and I'm sure you've experienced this, you'd go and they'd basically say, well, you haven't really told us what you want from us or what you might give us, we don't know, so that's why we're gonna throw in our lot with China. You have a China strategy, so that's what we're gonna do. So I think you do need to differentiate, but the other is if you wait to solve things until you can solve them in the context of the global negotiations, you're gonna be waiting a long time and you're gonna have a lot of difficulty differentiating, which is a big problem. I'm gonna try and take a group of questions, so please keep your questions brief so we can fit them in. We've got one there, one there, one there, and then we'll try and get yours then, okay? Moses McCall, curious bystander. My question is in terms of adoption. I was wondering, do you think it's important to consider cultural aspects of a clean technology adoption in developing countries or is it just a question of access to reliable source of energy? I'm waiting for me, Institute of Foreign Policy Analysis. I normally do China security issues and I'm here this morning because I got invited to a conference in Shanghai the 14th of October called the Pacific Forum. It's sponsored by the China Energy Fund Committee. I wonder if you've ever heard of it or is this just a way to get me to the Shanghai Expo? Which I reluctantly have agreed to go to as well. But seriously, do you know this group and I'm supposed to speak to it? I have a question up there too, if I can think. Okay, we're right there. My name's Martin Appel from the Council of Scientific Society Presidents. Will the innovators dilemma forever be with us? We definitely need to address climate change as quickly as we can and as effectively as we can. As we go through the process of building any technology system based organization, company, commercial enterprise, we keep moving up from the bottom to the top in the value chain until we've exported the entire thing across the ocean somewhere. How do we develop our economy if we continue to do that and how do we save the earth if we don't? Okay, and then we'll try and get these two right behind you and so. Kind of along the, well my name's Christopher Cross from the National Environmental Education Foundation and sort of along the lines of what he was saying. I guess the question of jobs and comparative advantage, I'm just curious, one thing that I don't think was explicitly brought up is differences between countries and labor and environmental standards. I guess if there is going to be greater international cooperation on some of these technology issues, it almost seems incongruent to have this greater cooperation but then to have potentially stark differences in labor and environmental standards. So I guess just if you could maybe address the issue of to what extent are these differences reflected in different genuine comparative advantages? And my name is Karen Shea. I'm with the Space Solar Power Information Service and one technology that is getting away from the US is Space Solar Power which was invented in the United States 40 years ago which now the Japanese and the Europeans are investing in heavily. And the question is on Peter Gerritsen came out with a paper this week saying that the US and India should develop space solar power together. Does anybody have a comment on that? Okay, so we've got a question on the cultural aspects of technology adoption. The innovators dilemma question. I'm a question about sort of how do we deal with differentiating labor and environmental standards in other countries and then finally space solar power. Anyone want to take a shot at pieces of that, Debra? Yeah, sorry. The, there certainly is a huge need to just not dump technology on people's doorsteps without figuring out how do you diffuse them? So obviously there's issues of distribution but there's a question also of looking for who's gonna set models. So many countries have done something the equivalent of greening the White House as a way of sort of demonstrating. You see this in Latin America. You see it to some extent in Asia where you're using government buildings to demonstrate. That's a really obvious. The other one is not key role models in society. So for example, just a very quick one, in the family planning efforts in Thailand, one of the first things that the Michai who was one of the most successful proponents who ran an NGO was to work through Buddhist monks who have a huge impact on their society and they became a source of condoms. And quite frankly when the NGO I was running at the time was working on it, we were looking at what can we do with the Buddhist monasteries in terms of compact fluorescence. So there's certainly elements of adaptation to the culture that are critical, without a doubt. So a handful of quick thoughts. The cultural issue is really important. It's not just a perception thing. For example, if you make an energy efficient refrigerator that works here, it may not be appropriate for India where they have different foods and different electricity systems and whatnot. That means that one of the things you want to do as part of a technology transfer strategy is actually craft your own innovation strategy to create things that may make sense deployed elsewhere even if they don't make sense deployed here. And in particular, one interesting idea I've heard thrown around is do things in more modular ways so that you can essentially put them back together in different forms in different parts of the world. So I think it's important to think about how we craft our own innovation strategy so that there is technology worth moving out there. I mean, this broader innovators dilemma, how do we get away from having it here and then there? Look, there's a lot of stuff that started here and has then been there and we seem to have been able to develop an economy. And the question is, how do we avoid this when it's not appropriate? Okay, so important not to have this sort of absolute let's not let things get away. We got to hang on to absolutely everything. I mean, it's been good that we didn't hang on to the salad shooter manufacturing industry. I mean, there are others where we've probably made mistakes. And the last, though whoever, you know, got that as a firm is doing quite well. And on the last piece is important not to put too much burden on the energy agenda. Labor and environmental standards, important stuff for trade policy. Leave it to the trade policy people. If we try to solve all these things as part of our energy agenda, we're going to have some trouble. Yes, I have a comment about the conflict between job creation interest and the climate interest. I think this is a especially important issue in this country in the US, which is democratic run and people all have a voice. But I do think the policy makers have to make a choice have to sometimes we have to compromise which one is more important. Is climate change the threat? The threat our human beings common threat? Or just some group's job opportunity? Maybe that's not politically correct for me to say I'm Chinese. So I think government really would supply already. That's really every government has to choose. And for the Chinese government, it also has that conflict because in order to really reach China's 11th, five year energy efficiency goal, China closed down lots of small coal-fired power plants. They are really very important employer at local levels. And according to their plant, any coal-fired power plants that's smaller than 100 megawatt have to be closed down. Lots of people lost the job. But again, that's our common threat to climate change. We have to face it, so. I agree wholeheartedly with Mike that separating the labor and environmental strategies from the energy agenda is an important piece. It underscores the cultural differences that we have and the United States has been accused in the past about ramming our requirements and cultures down other people's throats. And that hasn't been all that successful for us in negotiating strategies. So I think that's an important piece. It also, that cultural difference also underscores some of the competitive advantages that different countries have. We have a creative, individualistic, innovative society and that shows in our innovation economy and perhaps underscores some of why we've moved a little bit away from the manufacturing, although not as much perhaps as the press likes to say we have. But the cultural differences show up in more places than just product adoption. And I think we need to be sensitive to that. Well, great, I don't wanna keep anyone too long. This is gonna be, I think, what we've heard from the presentations, this is gonna be a really important issue to follow for the near future and for years to come. I think one of the points Michael made about sort of chasing a smaller and smaller pie on the pull side of this equation, on the push side, we'll be looking for ways to sort of push out innovation and incentivize innovation in a time of fiscal austerity in a lot of places and that'll have sort of an impact as well. So, but thank you all for coming and I wanna ask you to help thank the panelists today for such excellent presentations and a good discussion.