World leaders are talking a lot about climate change, not least in their flashy statement on controlling global temperatures at the recent Group of Eight summit in Italy. One of the smarter ways they can put this determination into effect will be to protect the intellectual property of green innovators from a growing onslaught by developing-world politicians and mistaken activists.
Intellectual property rights are the underappreciated link in the environmentalist chain. By rewarding inventors and entrepreneurs, well-enforced patents provide the right incentives for the innovation that will produce technologies necessary to manage climate change. Yet this fact is getting lost. Access to low carbon technologies has become a central issue in international climate change negotiations as rich countries put more pressure on the poor to cut their emissions. Understandably the poor aren't prepared to do so unless they are given cheap access to technologies. Patents are increasingly viewed as the main obstacle to cheap technology transfer.
So a representative of the Brazilian government, Haroldo Machado Filho, this week told a World Intellectual Property Organisation conference in Geneva that leaders should consider the possibility of allowing "compulsory licensing" for green technologies. This would be a new loophole in international intellectual property rules that would allow developing-country governments to break patents "for the public good"; such a loophole already exists for pharmaceuticals. In a similar vein, Indian Climate Change Minister Shri Ramesh asserted late last month that access to intellectual property for low-carbon technology is a "global public good". This kind of thinking lays the intellectual groundwork for patent violations down the road.
Most worrying, opponents of patents have succeeded in having included in the current negotiating text for a post-Kyoto agreement paragraphs to undermine patents. The final text won't be finalised until at least the December U.N. Copenhagen meeting, but current proposals range from "compulsory licensing" to the "creation of a global technology pool for climate change" that would socialise intellectual property.
These proposals fundamentally misunderstand why low-carbon technology is expensive. A January report by Copenhagen Economics, a consulting firm, found that the high prices are most likely a result of the immaturity of technologies, not patents. New technologies are generally more expensive when there are fewer products competing in the market. As more technologies are innovated the price is likely to drop. Most promising green technologies are so new they simply haven't had time to decline in price yet.
The Copenhagen Economics report also notes that weakening intellectual property for green technologies would be bad for the developing world countries whose governments advocate such measures. A growing number of patents on these technologies are held by developing-country innovators. China is one of the largest owners of solar and fuel-cell technology patents. The balance is still in favour of developed-world innovators, but the gap is narrowing fast. Allowing entrepreneurs in poorer countries to profit from their discoveries will be good both for the environment and for developing-country economies.
Undermining patents won't help access to technologies, but it will stop the next generation of technologies being invented, and with it a long-term solution to achieving the twin goals of developing countries to reduce emissions and alleviate poverty. Rather than breaking patents, policy makers could re-evaluate tariff regimes and other barriers that can add up to 165% to the cost of some imported green technologies, according to a 2007 World Bank study. The best path to a green future is not to break free-market principles, but to return to them.
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