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The Green Impact Fund for Technology (GIFT)

… rewards emission reductions achieved in the Global South with any patented green
technology whose monopoly privileges in this “GIFT Zone” are waived.

Green technologies typically compete at a disadvantage against their dirtier alternatives
because they contain more intellectual property. Each year, states grant many thousands of
patents related to climate change mitigation. Such patents encourage R&D only because they
allow patentees to exclude competitors and charge high prices. But these same monopoly
markups impede diffusion – especially of green technologies, where the buyer typically enjoys
only a small fraction of the social benefit from their use.
In the rich countries, this headwind against adoption is compensated through environmental
regulations, taxes on emissions and green subsidies, which encourage the choice of green
technologies by prohibiting, limiting, or penalizing the use of their dirtier alternatives. But
such compensatory measures are largely absent in the Global South because they would
cause substantial cash outflows to Northern patentees. The South is not keen to pay steep
monopoly rents to the much richer North for permission to help avert a global disaster that
the North has unleashed through its disproportional production and consumption. Nor will
Southern states willingly slow or forgo their own development because the North has emitted
too much already.
Scant deployment of green technologies in the Global South is a big problem. In the remainder
of this 21st century, these countries will experience massive economic growth, intensified by
large increases in population. The technologies they will use, the practices and habits they
will form, the roles they will be prepared to play in the fight for a livable planet will matter far
more than any choices affluent nations will make within their own borders. Rapid emissions
reduction requires that highly effective and locally appropriate green technologies be widely
and quickly deployed throughout the Global South.
The Green Impact Fund for Technology is designed for this purpose. The GIFT would invite
patentees to register any new green technology, with two effects strictly confined to the GIFT
Zone (all countries below a certain per-capita income threshold):
• the innovator grants permanent royalty-free licenses throughout the GIFT Zone for its
registered technology; and
• the GIFT includes this registered technology in its next six fixed annual disbursements,
split among registered innovations according to emissions averted with each in the
GIFT Zone in the preceding year.
Over time, a stable, self-adjusting reward rate would emerge on the GIFT. When innovators
find it unattractive, registrations dry up and the reward rate rises as older innovations exit at
the end of their reward period. When the reward rate is seen as highly attractive, registrations
proliferate, and the reward rate declines. Such predictable adjustment assures registrants of
an attractive reward rate and also reassures GIFT funders that this rate will be restrained by
wide competition among green innovators.
The GIFT’s novel incentives would transform motivations. While monopoly rewards incite
massive efforts to deter, find and terminate patent infringements, impact rewards encourage
innovators actively to promote the rapid, widespread and effective deployment of their
innovation for optimal impact. Such innovators would not merely charge nothing for the use
Pogge&Hollis/GIFT 2
of their innovation but would encourage its deployment by providing technical assistance or
even by subsidizing its use — if and insofar as the increase in impact rewards earned from such
promotional investments is expected to exceed their cost.
Not merely avoiding the headwind of monopoly rents but also adding a tailwind of impact
rewards, the GIFT would boost the diffusion of key green technologies in the GIFT Zone, with
massive reduction of emissions (CO2e) in the Global South. Especially for technologies geared
to poor populations and tropical regions, the GIFT would also open whole new areas of green
R&D, accelerate the overall pace of green innovation and expand capacities for innovation
and manufacturing in the Global South.
The climate impact of the GIFT would greatly exceed the sum of the assessed and rewarded
impacts of all GIFT-registered innovations. This is so not only because the GIFT confines the
rewardable impact of a registered innovation to the first few years after registration. A more
important reason is that, by accelerating the pace of innovation, the GIFT raises the standard
against which registered innovations will be assessed. Over time, this effect will grow to be
quite large. A registered green technology introduced in 2040 will be rewarded for the
emission reductions it achieves relative to the alternatives being deployed in that year. But
this 2040 state-of-the-art will be far superior to what it would have been if the GIFT had not
been in operation for the preceding decade or more. This acceleration of green innovation is
an achievement for which the GIFT need not pay any of its registered innovators. It is likely to
be especially significant in classes of green technologiesthat, under the current regime, suffer
neglect because they are suitable for use only in the Global South, are more expensive than
their dirtier alternatives, or bring widely diffused benefits that buyers/users care little about.
An experimental pilot could test and refine the GIFT idea and thereby make adoption of the
GIFT more feasible and likely. This pilot would involve a single reward pool of, say, €100
million, to be split among preselected green innovators in proportion to the emission
reductions they achieve with their respective innovations, affordably priced, in a self-selected
region of the Global South over a 2-year period. The pilot would show concretely how green
innovators respond to the novel competitive impact rewards and how ecological impact can
be assessed in a reliable and timely manner. It would help refine impact assessment and
provide an indication of the cost-effectiveness of competitive impact rewards. The GIFT pilot
would also yield its own ecological benefits through the pilot projects it monitors and rewards.
The GIFT and its pilot should be financed by affluent countries of the Global North. They can
most easily afford it and also bear the greatest responsibility for the climate crisis. Making
this gift would help rich states meet their responsibilities and commitments in regard to
Sustainable Development Goals 13 and 17, reaching 0.7% of GNI in development assistance,
and devoting $100 billion annually to helping poorer nations adapt to climate change and
mitigate further rises in temperature, as promised at the 2009 COP-15 in Copenhagen.

Summary recommendation:
The G7 should explore innovative mechanisms to accelerate deployment of emissionreducing technologies in developing countries, such as the Green Impact Fund for Technology.

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