New CTCN publication: The role of the CTCN as a climate technology and innovation matchmaker for developing countries

Publication by Woo Jin Lee * and Rose Mwebaza

In this paper, the role of a matchmaker in transferring climate technologies to developing countries was explored from the perspective of open innovation. As the United Nations Framework Convention on Climate Change’s Technology Mechanism, the Climate Technology Centre and Network (CTCN) has strong convening power amongst the stakeholders who are responsible for climate actions in their country. Our research identified that the CTCN has successfully provided “4 openness” models (open network, open request for Technical Assistance, open technology transfer and finance, and open knowledge for the public) to global partners through its technical assistance (TA) services. Then, on the basis of previous empirical Technical Assistance data and network management a new open innovation model was proposed by considering the CTCN matchmaking activities with key stakeholders (innovation networks) during the climate technology transfer processes. This model explains that the role of the CTCN and innovation networks such as academia/research institutions, governments, and the private sector can be interpreted as outside-in innovation at the first technology outsourcing stage, coupled innovation at the second technology research, development, and demonstration (RD&D) stage, and inside-out innovation at the third technology diffusion stage. Moreover, further matchmaker’s approaches for supporting developing countries to establish a conducive and sustainable innovation system were suggested for the extension of the new model.

Innovation during Climate Technology Transfer: 4 Openness

The CTCN has three core services: (1) providing technical assistance (TA) at the request of developing countries, (2) creating access to information and knowledge on climate technologies, and (3) organizing outreach and networking activities among climate technology stakeholders. Here, we focus on “openness” within the CTCN services to exemplify the aspect of open innovation model: (1) open network with various actors like academic/research institutions, governments, private sectors for agile use of external resources, (2) open requesting the climate issues from developing countries (country-driven request), (3) open technology transfer and finance, and (4) open knowledge for public.

Open Network: Innovative Triple Helix

A key component of the CTCN is its network. The network consists of a variety of climate technology experts/institutions that can engage in the CTCN’s activities to deliver climate solutions at the requests of developing countries, using their technical knowledge and expertise. As of March 2020, 554 organizations from 90 countries participate in the network, and among them private sector organizations are the most numerous (48%), followed by research and academic organizations (22%), non-governmental organizations (11%), not-for-profit organizations (7%), and public sector organizations (7%). Through our own category on their expertise, 99 organizations (about 20%) were selected as the innovative network members, which participated in Tas for innovative technology development and transfer as demonstrated in the table below.

Table. Example of key activities of technical assistance for scaling up innovation.

The CTCN acts upon local and national ownership and country-driven needs, so the establishment of a National Designated Entity (NDE), a focal point of the CTCN under the TM, is an initial step for all stakeholders to engage into the network. The appropriate roles of NDEs in technology innovation include any actions that assist the stakeholders in meeting public good objectives that cannot be accomplished by the CTCN alone without government participation or leadership. As of March 2020, 161 countries had nominated their NDEs to communicate with the CTCN. The CTCN activities promote innovation along the technology cycle, balancing NDEs’ adaptation and mitigation priorities in line with the objectives of the Paris Agreement, by managing national requests for TA (for developing countries), facilitating engagement in the network, and coordinating regional and global peer learning, collaboration, reporting, and feedback.

Future Innovation for Climate Technology Transfer

Previously, we observed that the CTCN has successfully accomplished open innovation throughout its entire TA processes by collaborating with key stakeholders within innovation network at stages from technology outsourcing (1st Stage), technology RD&D and finance (2nd Stage), to technology diffusion (3rd Stage). However, in order to accelerate innovation as an effective and efficient matchmaker for climate technology transfer, there is a need to support developing countries to strengthen their NIS. This implies that the ultimate role of the CTCN should be emphasized as a “matchmaker for NIS” within innovation networks at the 3rd Stage by engaging new innovation policies both at the 1st and 2nd Stages. Establishment of the NIS is essential for enhancing developing countries’ capacity to develop, deploy, and diffuse climate technologies. Also, it is required to support continued technological improvement and adaptation to regional needs. As previously mentioned, in the NIS, technology innovation should be sustainable and diffusible and enable active linkage between the actors through effective matchmaking. Thus, based on our new open innovation model, we discuss futuristic roles of the CTCN in climate technology transfer as an innovative matchmaker within the context of the three components of the NIS establishment in developing countries: actors, institutional contexts, and linkages.

New Actor’s Engagement

In order to boost the matchmaker roles for technology diffusion, the CTCN should employ more innovative features at the 1st Stage, aiming to engage more governments through their NDEs and new academic/research institutions/private sectors within the TA services. For enhanced NDEs’ participation, instead of filling in a template for TA requests, developing countries can submit their requests using a  video file sharing their climate challenges and issues, which takes less time and effort than preparing TA requests. Regarding the requested climate TA, several candidates (service providers from the public and private sectors) compete with each other by presenting their proposals in an open competition event. Through this, fair and transparent competition under a judging committee comprising various external stakeholders such as NDEs, FM entities, and the most innovative actors from the private sector with market-pull viewpoints, can be selected as TA service providers, “demonstrators or deployers” or “incubators or accelerators.”

Institutional Context

In order to enhance coupled innovation during the 2nd Stage of technology RD&D and finance, it is important for the CTCN to identify more national information of developing countries i.e., the national needs, priorities, and gaps related to the NIS, and to catalyze the enabling environment by considering their multiple barriers such as policy, legislation, regulations, economy, finance, market, technology, society, etc. From an institutional point of view, the CTCN has identified the multidimensional nature of the barriers for technology development and transfer, and also proposed policies, strategies, and initiatives to developing countries as an enabler to tackle them.

Thus, as an innovative matchmaker for technology transfer, the CTCN needs to support especially the learning processes to reduce risk and helping technology providers to transform inventions into technologies that meet economic or societal needs of developing countries by engaging new innovative actors at a developing country’s request on strengthening NIS. For this purpose, the CTCN is recommended to establish a new framework of technology RD&D, assigning participants as innovative actors such as “demonstrators or deployers” and “incubators or accelerators” at the 2nd Stage. Firstly, the roles of the former innovative actors are to outsource the “innovative, but overlooked climate technology” from developed countries, and then widely demonstrate or deploy for modification to local contexts of developing countries under the less complicated regulation. This means that those technologies are to be easily “localized” in developing countries under the flexibility of local institutional regulatory frameworks.

Furthermore, a well-defined business model for those technologies in developing countries can be developed by the  innovative actors of incubators and accelerators. Such models can be used to mobilize further funding from private investors like business angels, venture capitalists (VCs), and initial public offerings (IPOs). They are expected to participate in establishing stable business-friendly environment, for the NIS through “inside-out” innovation under external market-pull policy. Successful engagement of potential private investors in the framework of collaborative RD&D is another exogenous and effective “incentive” to accelerate growth and achieve market leadership, provided or organized by the innovation network. 

Linkages

As a final component for NIS, linkages mean more interactions and relations between new participants and the institutional context within NIS. Throughout the CTCN’s core mandate, they can be done by preparing several initiatives on “coupled innovation” with local endogenous capacity engagement, building entrepreneurship, and incubation/acceleration at the 2nd Stage of technology RD&D and finance. Harmonized RD&D with the needs of the local partners is a key factor of the successful “coupled innovation” process for the ultimate establishment of NIS.

With the aim to strengthen the capacity of local industrial small- and medium-sized enterprises (SMEs) and create the industrial SME markets from climate technologies, the CTCN is running SME clinics in developing countries. Potential approaches are: (1) strengthening policy frameworks that support the scaling up of specific climate technologies in a country; (2) incubator program to support them with business plan development, strategic partnerships, or financing; (3) capacity building related to the operation of a specific technology; (4) development of a local service provider who can support the SME cluster with legal matters, communications, or storage facilities; (5) funding scheme development with local financial institutions for the take up of the selected climate technologies identified; and (6) demonstration project of selected climate technology. Two projects for industrial SME clusters in Kenya and Tanzania are actively on going by the support of the CTCN together with Kenya climate innovation center.

Moreover, for more outreach activities of innovation at the 3rd Stage of technology diffusion for new market formation and knowledge sharing, it is worthwhile to note that climate technologies can be converged with so-called, emerging digital technologies, i.e., machine learning, cloud computing, Internet of Things (IoT), and blockchain technology. These emerging technologies can enhance information transparency, increase automation, and enable direct interactions between stakeholder groups by creating a trusted information layer by combining IoT sensors (data collection), machine learning (verification and analysis), and blockchain technology (distribution and execution).

Especially, blockchain acts as a decentralizing technology platform that creates innovative business and governance models. These innovative models are particularly relevant for SME businesses in developing countries, which are disproportionally constrained by financial and informational barriers. By addressing these barriers, emerging technologies offer developing countries the opportunity to leapfrog into innovative systems to accelerate sustainable development and climate action. Previously, innovative early warning systems for enhancing climate resilience were developed in Thailand by connecting various digital technologies with software (SW) modelling and associated climate data.

Also, these IT-incorporated TA results can be transformed to various types of outcomes on the CTCN’s website e.g., innovation reports, TA stories by social media, and SW products for on-line pay-as-you-go applications like waste-to-energy simulation tool, climate monitoring system, coastal hazard risk management system, etc. Therefore, with more IT connectivity to KMS, the CTCN can distribute more transparent and automated services by providing “one-stop technology transfer shop” on the website for developing countries seeking climate solutions through: (1) on-line requesting (from government, public), (2) auto reviewing and selecting best implementors for response plans/direct proposals by open competition events, (3) auto matchmaking based on artificial intelligence for analyzing or executing big data (about the requested climate issues, diverse local contexts, innovative solutions by Network) gathered at virtual cloud server, from various local IoT sensors within blockchain security, and (4) growth in technology from laboratory to up-scaling for new businesses with linkage to further supports.

*This work was supported by secondment program in Ministry of Science and ICT (MSIT), Republic of Korea