Editing IPCC:AR6/SR15/Chapter-4 (section)

== Box 4.7: Bioethanol in Brazil: Innovation and Lessons for Technology Transfer ==

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The use of sugarcane as a bioenergy source started in Brazil in the 1970s. Government and multinational car factories modified car engines nationwide so that vehicles running only on ethanol could be produced. As demand grew, production and distribution systems matured and costs came down (Soccol et al., 2010) <sup>[[#fn:r1283|1283]]</sup> . After a transition period in which both ethanol-only and gasoline-only cars were used, the flex-fuel era started in 2003, when all gasoline was blended with 25% ethanol (de Freitas and Kaneko, 2011) <sup>[[#fn:r1284|1284]]</sup> . By 2010, around 80% of the car fleet in Brazil had been converted to use flex-fuel (Goldemberg, 2011; Su et al., 2015) <sup>[[#fn:r1285|1285]]</sup> .

More than forty years of combining technology push and market pull measures led to the deployment of ethanol production, transportation and distribution systems across Brazil, leading to a significant decrease in CO <sub>2</sub> emissions (Macedo et al., 2008) <sup>[[#fn:r1286|1286]]</sup> . Examples of innovations include: (i) the development of environmentally well-adapted varieties of sugarcane; (ii) the development and scaling up of sugar fermentation in a non-sterile environment, and (iii) the development of adaptations of car engines to use ethanol as a fuel in isolation or in combination with gasoline (Amorim et al., 2011; de Freitas and Kaneko, 2011; De Souza et al., 2014) <sup>[[#fn:r1287|1287]]</sup> . Public procurement, public investment in R&amp;D and mandated fuel blends accompanying these innovations were also crucial (Hogarth, 2017) <sup>[[#fn:r1288|1288]]</sup> . In the future, innovation could lead to viable partial CO <sub>2</sub> removal through deployment of BECCS associated with the bioethanol refineries (Fuss et al., 2014; Rochedo et al., 2016) <sup>[[#fn:r1289|1289]]</sup> (see Section 4.3.7).

Ethanol appears to reduce urban car emission of health-affecting ultrafine particles by 30% compared to gasoline-based cars, but increases ozone (Salvo et al., 2017) <sup>[[#fn:r1290|1290]]</sup> . During the 1990s, when sugarcane burning was still prevalent, particulate pollution had negative consequences for human health and the environment (Ribeiro, 2008; Paraiso and Gouveia, 2015) <sup>[[#fn:r1291|1291]]</sup> . While Jaiswal et al. (2017) <sup>[[#fn:r1292|1292]]</sup> report bioethanol’s limited impact on food production and forests in Brazil, despite the large scale, and attribute this to specific agro-ecological zoning legislation, various studies report adverse effects of bioenergy production through forest substitution by croplands (Searchinger et al., 2008) <sup>[[#fn:r1293|1293]]</sup> , as well as impacts on biodiversity, water resources and food security (Rathore et al., 2016) <sup>[[#fn:r1294|1294]]</sup> . For new generation biofuels, feasibility and life cycle assessment studies can provide information on their impacts on environmental, economic and social factors (Rathore et al., 2016) <sup>[[#fn:r1295|1295]]</sup> .

Brazil and the European Union have tried to replicate Brazil’s bioethanol experience in climatically suitable African countries. Although such technology transfer achieved relative success in Angola and Sudan, the attempts to set up bioethanol value chains did not pass the phase of political deliberations and feasibility studies elsewhere in Africa. Lessons learned include the need for political and economic stability of the donor country (Brazil) and the necessity for market creation to attract investments in first-generation biofuels alongside a safe legal and policy environment for improved technologies (Afionis et al., 2014; Favretto et al., 2017) <sup>[[#fn:r1296|1296]]</sup> .

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Funding for R&amp;D could come from various sources, including the general budget, energy or resource taxation, or emission trading schemes (see Section 4.4.5). Investing in climate-related R&amp;D has as an additional benefit of building capabilities to implement climate mitigation and adaptation technologies (Ockwell et al., 2015) <sup>[[#fn:r1297|1297]]</sup> . Countries regard innovation in general and climate technology specifically as a national interests issue and addressing climate change primarily as being in the global interest. Reframing part of climate policy as technology or industrial policy might therefore contribute to resolving the difficulties that continue to plague emission target negotiations  (Faehn and Isaksen, 2016; Fischer et al., 2017; Lachapelle et al., 2017) <sup>[[#fn:r1298|1298]]</sup> .

Climate technology transfer to emerging economies has happened regardless of international treaties, as these countries have been keen to acquire them, and companies have an incentive to access emerging markets to remain competitive (Glachant and Dechezleprêtre, 2016) <sup>[[#fn:r1299|1299]]</sup> . However, the complexity of these transfer processes is high, and they have to be conducted carefully by governments and institutions (Favretto et al., 2017) <sup>[[#fn:r1300|1300]]</sup> . It is noticeable that the impact of the EU emission trading scheme (EU ETS) on innovation is contested; recent work (based on lower carbon prices than anticipated for 1.5°C-consistent pathways) indicates that it is limited (Calel and Dechezleprêtre, 2016) <sup>[[#fn:r1301|1301]]</sup> , but earlier assessments (Blanco et al., 2014) <sup>[[#fn:r1302|1302]]</sup> indicate otherwise.

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==== 4.4.4.4 Technology transfer in the Paris Agreement ====

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Technology development and transfer is recognized as an enabler of both mitigation and adaptation in Article 10 in the Paris Agreement (UNFCCC, 2016) <sup>[[#fn:r1303|1303]]</sup> as well as in Article 4.5 of the original text of the UNFCCC (UNFCCC, 1992) <sup>[[#fn:r1304|1304]]</sup> . As previous sections have focused on technology development and diffusion, this section focuses on technology transfer. Technology transfer can adapt technologies to local circumstances, reduce financing costs, develop indigenous technology, and build capabilities to operate, maintain, adapt and innovate on technology globally (Ockwell et al., 2015; de Coninck and Sagar, 2017) <sup>[[#fn:r1305|1305]]</sup> . Technology cooperation could decrease global mitigation cost, and enhance developing countries’ mitigation contributions (Huang et al., 2017a) <sup>[[#fn:r1306|1306]]</sup> .

The international institutional landscape around technology development and transfer includes the UNFCCC (via its technology framework and Technology Mechanism including the Climate Technology Centre and Network (CTCN)), the United Nations (a technology facilitation mechanism for the SDGs) and a variety of non-UN multilateral and bilateral cooperation initiatives such as the Consultative Group on International Agricultural Research (CGIAR, founded in the 1970s), and numerous initiatives of companies, foundations, governments and non-governmental and academic organizations. Moreover, in 2015, twenty countries launched an initiative called ‘Mission Innovation’, seeking to double their energy R&amp;D funding. At this point it is difficult to evaluate whether Mission Innovation achieved its objective (Sanchez and Sivaram, 2017) <sup>[[#fn:r1307|1307]]</sup> . At the same time, the private sector started an innovation initiative called the ‘Breakthrough Energy Coalition’.

Most technology transfer is driven by through markets by the interests of technology seekers and technology holders, particularly in regions with well-developed institutional and technological capabilities such as developed and emerging nations (Glachant and Dechezleprêtre, 2016) <sup>[[#fn:r1308|1308]]</sup> . However, the current international technology transfer landscape has gaps, in particular in reaching out to least-developed countries, where institutional and technology capabilities are limited (de Coninck and Puig, 2015; Ockwell and Byrne, 2016) <sup>[[#fn:r1309|1309]]</sup> . On the one hand, literature suggests that the management or even monitoring of all these UN, bilateral, private and public initiatives may fail to lead to better results. On the other hand, it is probably more cost-effective to adopt a strategy of ‘letting a thousand flowers bloom’, by challenging and enticing researchers in the public and the private sector to direct innovation towards low-emission and adaptation options (Haselip et al., 2015) <sup>[[#fn:r1310|1310]]</sup> . This can be done at the same time as mission-oriented research is adopted in parallel by the scientific community (Mazzucato, 2018) <sup>[[#fn:r1311|1311]]</sup> .

At COP 21, the UNFCCC requested the Subsidiary Body for Scientific and Technological Advice (SBSTA) to initiate the elaboration of the technology framework established under the Paris Agreement (UNFCCC, 2016) <sup>[[#fn:r1312|1312]]</sup> . Among other things, the technology framework would ‘provide overarching guidance for the work of the Technology Mechanism in promoting and facilitating enhanced action on technology development and transfer in order to support the implementation of this Agreement’ (this Agreement being the Paris Agreement). An enhanced guidance issued by the Technology Executive Committee (TEC) for preparing a technology action plan (TAP) supports the new technology framework as well as the Parties’ long-term vision on technology development and transfer, reflected in the Paris Agreement (TEC, 2016) <sup>[[#fn:r1313|1313]]</sup> .

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=== 4.4.5 Strengthening Policy Instruments and Enabling Climate Finance ===

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Triggering rapid and far-reaching change in technical choices and institutional arrangements, consumption and lifestyles, infrastructure, land use, and spatial patterns implies the ability to scale up policy signals to enable the decoupling of GHGs emission, and economic growth and development (Section 4.2.2.3). Such a scale-up would also imply that potential short-term negative responses by populations and interest groups, which could block these changes from the outset, would need to be prevented or overcome. This section describes the size and nature of investment needs and the financial challenge over the coming two decades in the context of 1.5°C warmer worlds, assesses the potential and constraints of three categories of policy instruments that respond to the challenge, and explains the conditions for using them synergistically. The policy and finance instruments discussed in this section relate to Section 4.4.1 (on governance) and other Sections in 4.4.

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==== 4.4.5.1 The core challenge: cost-efficiency, coordination of expectations and distributive effects ====

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Box 4.8 shows that the average estimate by seven models of annual investment needs in the energy system is around 2.38 trillion USD <sub>2010</sub> (1.38 to 3.25) between 2016 and 2035. This represents between 2.53% (1.6–4%) of the world GDP in market exchange rates (MER) and 1.7% of the world GDP in purchasing power parity (PPP). OECD investment assessments for a 2°C-consistent transition suggest that including investments in transportation and in other infrastructure would increase the investment needs by a factor of three. Other studies not included in Box 4.8, in particular by the World Economic Forum (WEF, 2013) <sup>[[#fn:r1314|1314]]</sup> and the Global Commission on the Economy and Climate (GCEC, 2014) <sup>[[#fn:r1315|1315]]</sup> confirm these orders of magnitude of investment.

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