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U.S. Department of State

Diplomacy in Action

Green Innovation: Can Patents Help Make the World a Better Place?

FPC Briefing
Dr. Isi Siddiqui
Vice President, Crop Life International
Rob Shapiro, Chair of EcoIDEA: Innovation Drives Energy Advances; and Kira M. Alvarez, Deputy Assistant U.S. Trade Representative, Chief Negotiator for Intellectual Property Enforcement
Foreign Press Center
Washington, DC
April 22, 2009


Date: 04/22/2009 Location: Washington, DC Description: 04/22/09: Dr. Isi Siddiqui, Vice President, Crop Life International (center), Rob Shapiro, Victoria Espinel and Kira M. Alvarez brief on Green Innovation at the Washington Foreign Press Center. State Dept Photo

11:00 A.M., EDT

Audio

MODERATOR: I would like to welcome the journalists in New York, and we will take questions after we have had the brief presentations from each of our panelists here. Welcome to the roundtable on green innovation, and how intellectual property rights are helping to foster the kind of technology that we need to improve the environment and promote sustainable development.

We are very privileged to have with us several experts. First of all, I would like to recognize Dr. Isi Siddiqui, who has worked for a long time with the U.S. Department of Agriculture, and is now with the Crop Life America or International –

DR. SIDDIQUI: Crop Life America. I do work for both –

MODERATOR: Both of the organizations in the area of biotechnology. And we also have Dr. Robert Shapiro, who is an expert on energy innovation, which is what he now is using to help climate change and other things. So that's very important. And our Deputy U.S. Trade Representative, and chief negotiator for intellectual property, Kira Alvarez, who can address how the issues and international field of patent protection play out when we have to deal with new technologies.

I would like to ask, Dr. Siddiqui, would you make an initial presentation?

DR. SIDDIQUI: I would be glad to.

MODERATOR: Followed by Dr. Shapiro, and then we will have the USTR –

DR. SIDDIQUI: Good morning, and Happy Earth Day. As we all know, it is being held today. And I thank you all for participating in this discussion this morning. As was introduced, I have been in agriculture all my life, professional life, in terms of working with the State of California for 28 years, and then on to USDA, and now with the Crop Life America.

And, as you can see, our symbol is green, and if I may say, there is no greener industry than agriculture. You go out into the field and that's what you see. And you feed the world, in terms of providing sustenance. And technology and innovation has been a key part of agriculture all these years.

And if I could give you some background on this issue, you remember the food price hikes, as well as food shortages, and even some riots last year, about a year ago? It was in the news. And while there were a number of factors which contributed to it, one thing is for sure. This gives you just a kind of an image of what might happen if we were to have continuing food shortages.

And a number of experts, including International Food Policy Research Institute here in town, as well as World Bank report “World Development Report of 2008”, predicted that by 2050, we will need to double our food production in order to feed the ever-expanding population on this earth. And, therefore, it makes more sense for us to be talking about innovation and how it can contribute to another green revolution. And this does not take into account what I just said about the food price shortages.

If you bring another factor which is being discussed, again, as part of the green industries, the use of renewable fuels, you will need more acres and more productivity increases in order to address the food and needs of the globe, as well as the fuel needs.

We all know that there are two factors, the water and land, which -- if you look around the globe, especially in developing worlds-- it's already stretched to the limit. Any increase in land, arable land, or water, is going to be very minimal. And, therefore, it makes more sense for us to be talking about innovation, and how we can double or triple the production of food and feed and fuel crops, so that we can address the needs.

Now, the question arises: Technologically, is it feasible? And, based on the productivity increases of the last 40 years, where we achieved 200 to 400 percent increase in corn, soybean, and wheat yields, my answer is, in a more politically-correct way, "Yes, we can."

As we saw in the first green revolution in the 1960s and 1970s, I happened to be a student in India, at the UP Agricultural Institute. And what was the most fascinating about it, this institute was built by the USAID, with the -- at that time we called it TCN, technical (inaudible). And the technology transfer, what I saw, transformation from land grant colleges in the U.S. into India, and there about the same time you have Rockefeller Foundation and Ford Foundation working through CGIAR .

And many of you know the name of Dr. Norman Borlaug. He led that effort, along with his team, and cooperators from many Asian countries to achieve a green revolution and allow these productivity increases.

And essentially there are four factors which actually are practiced together. You have intellectual property, innovation, information, which was mostly in developed worlds, as well as with the help of the various non-profit groups.

High-yielding varieties were invented -- again, there is intellectual property involved, the use of fertilizers to nurse those crops, the use of crop pesticide chemicals to protect those crops against insects and weeds and pests, and proper management, and water, all these factors which -- led to this revolution.

What we need now in the 21st century is another revolution, which some people are calling the second green revolution. Norman Borlaug has called that a (inaudible) revolution, because it will likely use agriculture biotechnology.

And if I could just say why we need that. Most of the productive increases have been achieved through conventional breeding until now. And to achieve more in a very significant manner, you would not do it just by conventional breeding. You need to have use of 21st century technologies, including biotechnology, genetic technology, and all the other technologies which are being (inaudible), in terms of achieving that.

Just to give you an example, just using crop industry, in both the chemical part as well as the biotechnology seed part, innovation is not cheap. Just to market one chemical -- let's say an insecticide -- it takes about nine years from the first time you start working on an active ingredient chemical until you market it. It costs approximately $200 million in R&D and to commercialize it. And that’s one chemical ingredient, in order to achieve that one -- the right one-- you need to look at and run tests on about 140,000 molecules and isomers and different related isomers in order to achieve that one active ingredient which will work.

So, all this information involved, this is the intellectual property which these companies generate, they create. And once they have expired, this also provides to genetic companies all these molecules so that they can continue selling around the world. So they are providing, essentially, (inaudible), the pipeline, in terms of providing technology and invention, R&D. And once, you know, that patent has expired, then this moves on to other companies which are in generics.

Of course, investors expect a return on their investment, in terms of what that $200 million I mentioned to invent an insecticide. And companies -- if there is no innovation, these molecules will not be available. And for that, you need investment.

Also, in those countries which are not providing adequate intellectual property protection, you don't see new molecules being introduced. I think this is another point I want to make. In order to continue to feed the world and achieve this second green revolution, we need to have innovations coming in to the pipeline. And these molecules, which are being used (inaudible), they are state-of-the-art technologies, using molecular biology. Especially in chemicals, they have less harsh footprint on the environment, they are more green, in terms of the adverse effects and ecological effects. They are also tested more thoroughly.

So, those countries which are not (inaudible), essentially they are using older molecules which have (inaudible), and also these are the molecules which are more harsh on the environment. I think that's it.

So, in closing, let me just say that I think, in terms of achieving another green revolution, in terms of meeting the 21st century needs of the global population, including renewable biofuels, we can have, and will have, varieties which yield higher yields, which are more drought tolerant -- this is another issue, the shortage of water, you need to come up with varieties which will be more tolerant in terms of water shortages, and use less water.

And also, you need to develop more environmentally safe crop protection chemicals, which are being done right now. And also, if you have bio fuel crops, like switchgrass, which economically could not be commercialized for cellulosic contents, but, by using some of the technology, including biotechnology, you can improve the yield, so then you can make them more commercially viable crops to produce fuel.

And also, trees! By inserting some of the genes into those, you can grow trees for cellulose for biofuels at a faster rate, in terms of capturing the energy and carbon dioxide, and then they will also be releasing oxygen into the environment. So I think you are not only meeting the energy needs, but also helping the environment.

So, in short, by partnership, and also protecting patent rights, and protection for these technologies, we can achieve full food security and also meet the renewable energy needs of the 21st century, and make this world a better place to live.

MODERATOR: Thank you. Very good. Mr. Shapiro?

DR. SHAPIRO: Thank you. It's a pleasure to be here, particularly on Earth Day. Green tie.

(Laughter.)

MODERATOR: Good.

DR. SHAPIRO: Green suit, I see. I approach these questions as an economist, and an economist who focuses on policy. I should acknowledge I was President Clinton's principal economic advisor in his 1991-1992 campaign, and a senior advisor to Vice President Gore and Senator Kerry, in their campaigns. And I advised the Obama campaign and transition this year. It is part of my business I don't get paid for.

I am also very focused on issues of climate change. And I would like to talk about the intersection between climate change and intellectual property. To begin, we need to understand the context. This is not really about any particular sector, and it's not even about such a large issue as climate change.

Economists have long recognized that economic innovation is the single largest factor that drives changes in the trend growth rates of economies and the trend growth rate of people's incomes. This was really established in the 1950s. Bob Solo won a Nobel prize for it. (Economic Sciences 1987) And it's been confirmed and tested in our models. A whole range of models have found that, of all the growth achieved by the U.S. economy across the 20th century, and all the income gains, about 30 to 40 percent can be traced to innovation, economic innovations, as compared to about 20 percent, which can be traced to education and increases in skills, and 10 to 12 percent which can be traced to increases in the capital stock.

So, the area that government tends to focus on most, which is the capital stock, and saving incentives and investment incentives, those, in fact, play a much smaller role than the development of new ways to combine labor and capital, which is what innovation, from an economist's point of view, really is.

So, the legal and political arrangements affect the pace of both the development of innovations, but even more, the spread of innovations. What's important is not developing them, frankly, but rather, applying them effectively -- these are critically important to the prosperity of a society and a nation.

And also, both of those areas are areas in which the United States has excelled, and certainly, at least, in the last half-century, not only in the development of innovations -- and that really is significantly a result of the large support, both private and public, that's been provided -- and the development of our scientific, really, infrastructure. But, even more than that, the broad application and effective use of economic innovations, and that economists point to a more deregulated system that tends to encourage that.

At the same time, I work -- and many of us work --a great deal on issues of climate change. I am chair of a small organization, the U.S. Climate Task Force, which is designed to explore the economic implications of the different approaches to addressing climate change. We take the issue of whether or not we're going to approach it in a serious way as already settled. It certainly has been settled scientifically for a long time, for a decade anyway, and it appears to have been settled politically in the last couple of years.

So, the question becomes what are the administrative and economic implications of the different approaches. One of the most -- more recent findings by climate scientists is increasing evidence that the time frame for taking action is contracting, or is less than we had thought several years ago.

One way to gauge this is that there is a general consensus that we need to keep concentrations of greenhouse gases somewhere below the range of 450 to 550 parts per million. There is an argument about whether it's 450 or 550, but that's the range. And (inaudible) are now at 370 parts per million.

Well, the fact is that the 370 figure only applies to CO2. When you look at the other greenhouse gases as well, and convert them into greenhouse gas equivalents -- into CO2 equivalents -- you have about 415.

And the significance of that is that it suggests that the systemic approaches to addressing climate change, which is to say a carbon-based tax system -- which I happen to think is much more effective than economically -- has less economic costs -- or a cap and trade regime, the two major alternatives, while they are necessarily in order to setting a price on carbon to increase the incentives to develop and use more climate-friendly technologies and fuels, they may not be sufficient because the time frame seems to be contracting. And that tells us that we have to reinforce that systemic approach with a commitment to develop new technologies, additional technologies, and refinements of alternative fuels, as part of our -- the global effort to limit the costs of climate change.

And that brings us back to the basic incentives for the development and spread of new technologies of any innovation, and that is intellectual property rights. It is as non-controversial in economics as the fact that intellectual property rights are fundamental to the development of the incentives required to get people and businesses to withdraw labor and capital from uses which would already yield the highest return available at this time, in order to take the risk of creating something new that will produce a larger return. And the reason it produces a larger return is because it has intellectual property protection.

The only way that we know to create the incentives, to have people take money and labor out of uses which would already produce the highest return available in the market and put it into a risky development is to provide the intellectual property protection.

So, now we see that it appears that intellectual property rights are not only central to the path of growth and income gains of every modern economy, but appear to be central, as well, to the preservation of the climate. And this is particularly important to recognize because, while there is a consensus about all these issues among economists, there is no political consensus about it, particularly in the world.

And, as we have seen in the negotiations with the UN Framework Convention on Climate Change, challenges to intellectual property protections, and with respect to, particularly, to these technologies, are being mounted from some developing countries. This has been part of a process. It's not a new argument, it's an argument that's been offered at WIPO for the last seven or eight years.

And so, this is certainly not a settled political issue. And I do think that we need to recognize that the stakes protecting intellectual property rights have gone up enormously, that it's not just a matter of how much the median income goes up, but also whether or not we can preserve global ecosystems. I will stop there.

MODERATOR: Thank you. Ms. Alvarez?

DR. ALVAREZ: Well, good morning, everyone. And, again, as everybody else has said, Happy Earth Day.

Today's panel is titled, "Green Innovation: Can Patents Help Make the World a Better Place," and I don't know if I feel comfortable answering that. But I can say that I think that a functioning IP system can certainly -- and certainly a functioning patent system -- can certainly help with the dissemination of green technology. And, you know, I will leave it up to others to make sort of the normative and subjective decision about whether that's going to make the world a better place.

But, you know, as Dr. Shapiro just said, patents and other forms of IP are essential to encourage innovation, because of the incentives they provide. And so, you know, it provides the sustained innovation and competition, as a result of intellectual property rights, that also drives down the costs and increases the accuracy of market pricing, and eventually improves the quality of products over time, which I think is the point that Dr. Siddiqui was making --what we're seeing with agricultural technology. And that is all important for dealing with this issue.

Again, as Dr. Siddiqui said -- and I think I'm going to be repeating a lot of the points that my colleagues made previously -- patents are also important, because they do disseminate the technology. Because with a patent, there is a sort of a compromise. When the patent is created, you get the ability to exercise this patent and its invention for a little bit of time. You know, you have this monopoly, as it were.

But, in return, you have to disclose all the information about that invention. And thereby, by disclosing that invention, you encourage the fields of knowledge, and you allow sort of add-on and future innovations. And so, you know, we actually think that, you know, the patent doesn't lock up technology, it actually helps to create more technology that way.

We, because I'm at the U.S. Trade Representative's office, obviously we also believe that open markets are also important, and free trade, important to greatly expand markets, and to expand the markets in which companies can sell, which, again, encourages investment in R&D in these technologies, because if you don't have enough market to sell in, then you're not going to be able to sort of recoup the cost that you put into developing those technologies.

And those open markets are important, but sometimes (inaudible) goods can undermine the gains that are made by these market-opening arrangements. And this is why we, at USTR are always pushing to broaden the international consensus on the norms for IP protection and enforcement, in order to enhance the ability of firms to benefit from this innovation and to continue to have this incentive to innovate. And this is why we have included strong IP protections in a lot of the trade agreements that we have negotiated.

But I also want to focus on a point -- and again, I think Dr. Siddiqui was making this – on how in fact people see this -- and certainly in the discussions we have had in the UN framework convention, there is this sort of myth that has developed that we have all this technology here in the developed world, and the developing world needs access to it.

Well, we have actually found that there are many countries that are actually involved in climate technology. And you know, for instance, Suntech, which is a Chinese Company, is the largest solar cell and module manufacturer in the world. And India has the fifth leading wind power equipment manufacturer.

So, you have -- you know, and there are many other examples like this, and the EU just put out a study that shows that there is no one country that has sort of the lion's share of these clean technologies. So it's not a north-south issue, this technology is actually occurring around the world.

So, I would actually argue that the way things sometimes are framed in this antagonistic sort of developed and developing countries is the wrong model, because we can all benefit. And this is why developing countries, as well as developed countries, have an interest -- should have an interest -- in strong IP protection. So, you know, I think those arguments and what we've been saying here speak for themselves.

We believe that a strong IP protection, along with a predictable and stable legal system, open international markets, and a clear and transparent policy with regard to the protection of IP, and responsible and consistent environmental policies will increase the ability of developing countries to gain increased access to cutting edge clean energy technology.

MODERATOR: All right. We can now take questions. Would you like to start?

QUESTION: Sure. I have a question for you, Doctor. You seem to favor a more productive, high-yield agriculture. Now, some scientists are saying that agriculture in the U.S., which is extremely productive, as we know, contributes to greenhouse gases emissions to the same level as transportation.

So, I am wondering, by making this global, this more productive agriculture, are we really doing something beneficial for the (inaudible)? And if you looked at the consumption patterns of Americans, who are more overweight, for example, than most other people in the world, are we really doing the world a favor, encouraging them to eat more and to be less healthy in the end? Is this really beneficial for the planet, or the people who live on it, or is it more beneficial for maybe the investors from the companies that you do represent?

DR. SIDDIQUI: Actually, it's a two-part answer. Number one, I don't think anyone is encouraging here to put people to eat more than they have to. I think that was never said by anyone.

So, what really we're saying is we have no choice when it comes to meeting the food security needs of not only in the developed world but especially in the developing world, where you have a lot higher rate of growth.

So, essentially, in terms of feeding and achieving food security, it's not a choice. It actually has to be done. Otherwise, you will have crises like India faced in the 1950s, where every 5 to 10 million tons of wheat had to be imported. And because of the green revolution, they became self-sufficient. Only once in a while they will be importing grains from outside India.

So, I think the issue is, should we be growing for biofuel using food crops? Now, this is a question which has been debated. And the question is, in the present time you have crops which are used for food. Some of them are being used, like corn for ethanol and also sugar cane for also producing ethanol -- and soybean. That is a debate which I think will be essentially based on if you have some other crops like -- I mentioned switchgrass, which has no food use, or developing more crops which have no food use, so you're not really creating any food shortages, you are using crops for which there is no competition for food.

MODERATOR: New York, would the questioner identify himself and repeat the question for us again, please.

QUESTION: Right. Stephen Alsman, Danish Economics Weekly. Could you describe what are the problems with the current situation regarding patents today, and what would the implications be -- the current problems with -- there must be some problems with the current situation, because we're talking about it.

MODERATOR: Yes. Dr. Alvarez, perhaps you could address that.

DR. ALVAREZ: I don't think there are any problems. I personally don't think there are any problems with the patent system. But I think there have been claims that the patents, the current patent system might stand in the way of the dissemination of green technology. And that's why I was pointing out that it's not actually the case, because the patent system, because it does actually require the inventor to publish all the information, and disclose all the information, that actually helps to build the body of knowledge about these technologies.

And I think there have also been criticisms, or there have been concerns expressed, that this is going to be another situation where developed countries are going to have the lead, and going to sort of hold patents sort of -- hold them over the developing countries, and developing countries are not going to be able to access this technology, because the inventors and the innovators in the developed countries are not going to sort of want that, that technology, free disseminated.

And I think that's why I tried point out that there's a myth, because a lot of this technology is held all around the world. There is no particular country that has a leading edge here right now. And I pointed out, again, that China and India are some of the leading innovators in the system.

So, I was just trying to help dispel some misconceptions that are out there. I personally don't think there are any current problems.

MODERATOR: Dr. Shapiro?

DR. SHAPIRO: Well, I guess I am not quite as optimistic.

(Laughter.)

DR. SHAPIRO: Economists never are. Addressing climate change will involve enormous investments around the world by countries which are more or less capable of shouldering those investments.

In addition, it more critically involves reductions in the energy intensity of economic activity. And developing economies are much more energy-intensive than developed economies. They are concentrated in agriculture and manufacturing. Those are highly energy-intensive sectors, as opposed to Europe and the United States and Japan, which are much more focused on services, which are much less energy-intensive.

So, I have to say I understand the concerns of a lot of developing countries about the potential cost, not only of the technologies, but also of the transformation, and that one of the focuses has to be the development of technologies that can be -- that try to minimize these transitional costs that will -- the whole world will have to experience over the next 30 or 40 years.

Having said that, the fundamental fact, in my view, is that you cannot get the development of the technologies without intellectual property protections, that we just don't get there.

And the second -- the question of the cost, both of the technologies themselves and of the adaptations which every economy is going to have to undertake, but which will be more difficult for emerging economies in certain respects -- in other respects more difficult for our economy -- you know, developing countries can adopt climate-friendly technologies from the beginning. For example, in India, which has to -- is still building an energy system, they can -- and China is still building an energy system. They can adopt climate-friendly energy sources and technologies, whereas we're going to have to retrofit everything. And so, in that sense, the transition is harder for us.

But -- and we're going to have to take a lot of difficult political steps in order to make this transition politically and socially possible in a lot of different countries. It's going to be very expensive, for us, as well as for them. But there is no alternative, in the sense that we cannot get the technologies necessary to preserve a climate unless we maintain strong intellectual property protection.

MODERATOR: Dr. Siddiqui, do you see a problem with the current system?

DR. SIDDIQUI: Well, I think the system which is in place is just about right, in my opinion. There is no other alternative.

The other thing is you have a lot of these companies and NGOs which are coming forward with technology transfer being donated. I know, in biotechnology, some of the initiatives in the crop protection chemical industry and biotechnology industry where there is transfer of technology, which is being used to address local pest problems in Africa. So there are initiatives going on, and I think that's the right thing to do.

And what is known as the orphan crops, most of the companies will invest in innovations which are likely to bring return on corn and soybean and cotton to major crops. But there is not much research going on to (inaudible) problems of, say, some of the banana planting, so banana or some of the other crops which are used for food in Africa and other countries. So donating that technology which is already sitting on the shelf here to achieve those ends, in terms of building resistance and protection against pests, I think it makes sense as being done.

MODERATOR: Okay. Do we have more questions?

(No response.)

MODERATOR: Okay. I would like to clarify one thing. You mentioned about the time that someone who patents a new technology, whether it's in India or here, has. Is that universal? How long is it that a patent on, say, a biotechnology development lasts?

DR. ALVAREZ: It's 20 years.

MODERATOR: Regardless of the country?

DR. ALVAREZ: Yes, pretty much.

MODERATOR: Pretty much universal consensus. So people have to wait 20 years before it can become generic?

DR. ALVAREZ: Exactly.

MODERATOR: Okay. And you say it takes almost nine years for them to develop the technology?

DR. ALVAREZ: But it's 20 years from the time that it is submitted, that it's filed. And it's not granted right away. It's just not granted in year one.

MODERATOR: Oh, true, true.

DR. ALVAREZ: It takes a couple of years to grant, and then, at that point, it's also, a lot of times, sort of, you know, plans in sort of a laboratory somewhere. So it then takes a couple more years even after it's been granted for it to actually come on the market. So, 20 years sounds like a long length of time, but often it's much less than the full 20 years.

DR. SHAPIRO: Right. There are extensions. But there are strong incentives to file the patent as soon as you have the basic idea –

DR. ALVAREZ: Right.

DR. SHAPIRO: -- before anything has been developed.

MODERATOR: But you may not have the full 20 years.

DR. SIDDIQUI: Effectively –

DR. SHAPIRO: You never have the –

DR. ALVAREZ: You never have the full 20 years.

MODERATOR: You never have the full 20 years, because it is filed, and then it is there.

DR. ALVAREZ: I mean, it -- yes. It's filed when it's, literally, just a blue print.

MODERATOR: Okay.

DR. SHAPIRO: An idea.

MODERATOR: An idea, right.

DR. SHAPIRO: Exactly.

DR. SIDDIQUI: Effectively, it's less for crop protection technology. It's a lot less, because after the patent is granted you have to go to the regulatory agencies, like in the U.S., U.S. Environmental Protection Agency. Similarly, in the Ministry of Agriculture in India, and others, where they have to review all this extensive data, human health and safety data, or environmental safety data which has been compiled.

So those reviews take place after the patent is filed. So you are talking about -- getting the what I call license to sell, so to speak, is -- it takes two, three, or four years sometimes to get that registration in a country X or Y. So you're talking about less than 20 years.

MODERATOR: True, but that is very important for the environment, to have all of those.

DR. SIDDIQUI: It is.

DR. ALVAREZ: Right, right, exactly.

MODERATOR: Okay. Now, we have a question in New York. Please go ahead.

QUESTION: Can you hear me?

MODERATOR: Now we can hear you.

QUESTION: Okay. My name is Louise (inaudible), I'm from a newspaper in Denmark. Two questions, actually.

One is I wonder if you could elaborate on the legal system, the need for good legal systems. I think a couple of you mentioned it briefly, but isn't that really key? I mean, one thing is to have the protection. But if the countries don't have stable, predictable legal systems, then what is it worth?

And then, the second question is, Dr. Shapiro, I get your point about how it's really important to have IP protection, because otherwise you will never have technology development. But, on the other hand, you might argue that if you don't give these developing countries the technologies, then -- you say that also climate change is really urgent. So, what does this help, if technologies are too expensive, and the countries cannot adopt them, then we are in a Catch-22, or a dilemma. Could you elaborate on that? Thank you.

MODERATOR: We will start with the first question on legal systems. Would you like to do that, Dr. Alvarez?

DR. ALVAREZ: Sure. I think you're absolutely correct. You need a strong basis of rule of law. And, you know, a lot of these systems are based on rule of law. And, you know, but, you know, we work with all countries, trying to strengthen their rule of law, in general. So we also work with them to strengthen their IP systems as one of their components of rule of law.

I just want to -- before Dr. Shapiro answers the question, I just to make a point, which is I think that there is a perception that IP helps to add to the cost of this technology. And it is a factor, but I think we have to figure out -- I don't know that it is the determinative factor that increases the cost. There are also a lot of costs, in general, with bringing these technologies, and just the implementation of the technologies.

DR. SHAPIRO: Right.

DR. ALVAREZ: So I just wanted to clarify that a little bit.

DR. SHAPIRO: Right -- absolutely. The intellectual property protection does not account for most of the cost for these technologies. They would cost nearly -- not quite as much, but something -- but substantially, in the absence of any intellectual property protections, that's right. It's the actual cost of development and production.

And let me also say that the -- you know, the climate-friendly technologies are designed, in part, to reduce energy use. They tend to be very energy-efficient. That's not the only kind of climate-friendly technology, but that's a substantial part of all of them. Consequently, while they may cost initially more, through energy savings over time, they may not be more expensive at all. So that's often the case, you know.

The case of the new light bulbs, for example. But getting people to lay out $4 for a light bulb instead of $2 for a light bulb, even if you're going to save $2.50 over time, is hard to do.

Let me say on the other -- on the question about how do we bring online the large developing countries into a global climate regime. That's a very, very large challenge. China and India have both said they will not accept caps on their emissions. And so, different approaches may have to be developed or used in those countries.

But I think the critical thing here is that we will have to work out a cost sharing program, a global cost sharing program. It's my own view -- not speaking for any public official or administration -- that, just as we create global funds for the stabilization of currencies, and particular countries -- and, in fact, we've just decided -- we've just pledged to increase by $250 billion the amount that the developed world will pledge to the IMF for this purpose -- we are going to need global funds that shoulder some of the burden, particularly of very poor, developing countries.
And -- but I think there are lots of other approaches, as well. We can promote joint ventures between American and European and Japanese companies, and not only Chinese and Indian companies, but Bangladeshi companies and Indonesian companies and Malaysian companies and Brazilian companies. There are very -- these large developing nations, in order to try to both bring them into the process and reduce their costs.

And it also, of course, those ventures, as Dr. Alvarez has noted, align the interests of developing nations with the developed world in the protection of intellectual property.

MODERATOR: Dr. Siddiqui?

DR. SIDDIQUI: If I can just add this thought on patents, but -- or intellectual property, the high tax by many of these countries also adds to the cost. So there have been discussions going on in the World Trade Organization, negotiation, where you allow zero tax for environmental goods. And I think there seems to be very good support to -- once these negotiations, I hope, are completed, you have zero tax on all environmental goods moving in international trade. And that will reduce the cost.

DR. ALVAREZ: Environmental goods and services?

DR. SHAPIRO: Right.

DR. ALVAREZ: Oh.

MODERATOR: Is that well along, this negotiation?

DR. ALVAREZ: Well, it's part of the Doha negotiations.

MODERATOR: Oh, it's part of Doha.

QUESTION: How do you protect completely the technology involved in the production of the seeds, for example? Because I believe if you have a seed and plant it, it grows. It reproduces itself, (inaudible), right? So how do you make sure that your companies do get paid down the line for the technology that it created with the seed?

DR. SIDDIQUI: Well, I think this has been an issue. But a lot of it, there is built-in protection. Many of the hybrids which, until now, have been the most dominant seed varieties, hybrids -- the first generation of hybrid, which is seed, the farmer buys from the company, it has the most yield. If you save seed from this hybrid, which is called the next generation, if you plant that seed, it will not be that high.

So there is an incentive for farmers to go and buy need seed from a company, rather than saving seed from previous years. Some of these built-in protections are there, because of the way plant seeds work now. They have to -- it will be (inaudible) the next generation. So the first generation of hybrid seed is the most high yielding. So that actually allows for that.

And this has been the case. Many farmers in the older days, where they see a seed, one reason yields were a lot lower in -- 30, 40, 50 years ago, they were not renewing the seeds by buying new seed, and (inaudible) was diluted because of inbreeding and -- but also, many of the pests and diseases which were actually building up. So essentially, it makes sense for the farmers to be going and buying seed.

Now, with regards to biotechnology, there are restrictions on -- you know, by the technology companies, that you cannot save or sell seed for commercial purposes to gain -- have some profits from there. So I think there are clauses -- when a farmer buys that seed, let's say from Company X in the U.S., he has to sign their technology agreement.

QUESTION: Just to clarify. The seeds have been modified so that when they're reproduced they're not as good as when you first buy them.

DR. SIDDIQUI: No, they will still be good, but the -- in terms of other -- pollination and other in-breeding, you will not have as much vigor, and the same traits or quality as you will see in the first generation of seed the farmer bought from the company.

QUESTION: Do you know how much money is spent on making sure that those plants are protected?

DR. SIDDIQUI: I have -- you know, I don't have the figures. But I think this is part of the -- when the farmers buys seed, in the U.S. at least, they have to sign this agreement that they will not save seed or sell it to make profit, other than selling it for the purpose which is for grinding for corn, you know, for flour, or wheat flour. You know, they will not save the seed to (inaudible) or another generation, another crop next year. So that the purpose is to grow seed, to produce the crop, and use it for the purpose it's supposed to. But they will not use it for planting next year.

MODERATOR: Thank you. That is very helpful. I think we have all learned a lot. Thank you, New York, we appreciate –

DR. SHAPIRO: Can I just make --

MODERATOR: Dr. Shapiro? Please, go ahead.

DR. SHAPIRO: -- one last comment? I just want to -- it's kind of a pre-announcement. We are putting together a new entity called the EcoIdea Institute, which will focus on providing research and advocacy for policies that will promote a predictable environment for early-stage climate-friendly technologies and companies. And we hope to be a resource for all of you in those areas very soon.

MODERATOR: Okay. EcoIdea will be a -- like a think tank, an institute?

DR. SHAPIRO: Yes, yes, it's like a research institute.

MODERATOR: As opposed to a private enterprise?

DR. SHAPIRO: Yes. It's focused on research and public education –

MODERATOR: Dissemination of policy issues.

DR. SHAPIRO: -- about policy -- yes.

MODERATOR: Okay. Very good. Thank you for clarifying that.

DR. SHAPIRO: Sure.

MODERATOR: Okay. Thank you, New York. We appreciate your participation. And Happy Earth Day.

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