The strategic design of technology funds for climate cooperation: generating joint gains

Clean technology is central to climate cooperation. How can countries promote the development and adoption of new clean technologies? In this article, I examine the strategic benefits of establishing an international technology fund. A game-theoretic analysis shows that a technology fund with a dual mandate of rewarding technology development and subsidizing subsequent adoption can contribute to climate cooperation. Interestingly, a technology fund can also reduce North-South distributional conflict. My institutional analysis reveals two particularly important issues in the design of a technology fund: credible commitment to funding rules and the use of a balanced burden sharing rule. Based on these observations, I propose that a technology fund could be established within the institutional framework of the World Bank.

► A strategic analysis of the role of international technology funds in climate cooperation.
► A simultaneous focus on technology development and adoption is warranted.
► An international technology fund can alleviate North-South distributional conflict.