Panel Paper: The Learning Process and Technological Change in Wind Power: Evidence from China’s CDM Wind Projects

Thursday, November 7, 2013 : 3:20 PM
Georgetown II (Washington Marriott)

*Names in bold indicate Presenter

Tian Tang and David Popp, Syracuse University
As a global public good, the reduction of carbon emissions needs multinational collaboration. The Clean Development Mechanism (CDM) is an international carbon trade mechanism under the Kyoto Protocol that supports projects reducing carbon emissions in developing countries. Through these projects, CDM facilitates the adoption of climate-friendly technologies in developing countries and helps them achieve sustainable development through technological change. A typical CDM project has participants from both the public and private sectors of countries involved in the carbon trade. How these participants interact with each other affects the improvement of technology in the host country, which is a major outcome of the CDM project.

Using cross-sectional data from 656 registered CDM wind projects in China that started between 2002 and 2010, we examine the determinants influencing learning across CDM projects in wind power. “Learning” means how the knowledge related to wind power is acquired and diffused among project participants, including a state-owned or a private electric utility as the project developer, and domestic or foreign wind turbine manufacturers that collaborate with the project developer in many stages of a wind project. Based on project-level data, our research tests the effects of different channels of learning on technological change, measured as reductions in electricity production costs across CDM wind projects. The learning channels studied include learning through a turbine manufacturer’s R&D, learning from a developer’s previous project developing and operating experience, learning from rival developers’ experiences, and learning through the collaboration between a project developer and turbine manufacturer.

Our preliminary results show that a project developer’s previous experience and the collaboration between project developer and turbine manufacturer both help reduce the electricity production costs of subsequent CDM projects. While the existing literature has suggested that utility companies can learn from competitor firms, our research indicates that utility companies mainly learn from their own experience and that knowledge spillovers mostly occur within the collaborative partnerships between
utility companies and wind turbine manufacturers in China.

Our study contributes both to the literature on collaboration and technological change by bridgingthese two streams of research together. Our research extends the empirical study on collaboration to a new area, which is the international collaboration on carbon emission reduction and renewable energy technology diffusion. Our research also contributes to the study of technological change by highlighting the importance of collaboration for learning by doing and learning through R&D.

In addition, our research has policy implications for international climate policy makers and the Chinese government. Studying one of the world’s largest wind power producers in which most of the wind projects are supported by CDM, our research sheds light on how international collaboration, such as CDM, can lead to technological progress in wind power. Besides, it increases the understanding of the learning process in China’s wind industry and helps the Chinese government better target policies to facilitate different channels of learning, especially learning through the collaboration between electric utilities and wind turbine manufacturers.