Post on 22-Feb-2016
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Climate Change and International Investment AgreementsAaron Cosbey
Second Annual Forum of Developing Country Investment NegotiatorsMarrakech, November 3-4, 2008
Outline• The need for climate-related
investment• The types of policies that might be
used• Potential conflicts with standard
investment law provisions
The Need for Clean Energy Investment• Development perspective:
• 2.4 billion still using traditional biomass
• 1.6 billion no grid electricity• Environmental perspective:
• IEA estimates need for $27 trillion in incremental investment in developing countries by 2050 to reach IPCC targets
What types of policies might be needed?• Regulation of existing power
suppliers, high-energy use facilities• Outright closures• Demand for significant retrofit
investment• Discrimination in favour of clean
new technologies• Adaptation-related policies
• Water rationing, reallocation• Requirements for energy access
Regulation of existing facilities• Assume significant impacts from
regulation• First requirement: no
discrimination (national treatment)
• But even if no discrimination, outcome uncertain. Which legal interpretation of expropriation do we use? Police powers carve-out, or sole effects doctrine?
• Is there a stabilization clause? If so, regulation might be seen as a breach of contract. Or a breach of F&E treatment.
Discrimination in favour of clean energy• First question: are there pre-
establishment rights? If so, NT is important. No infant industry development.
• Next: are clean and dirty energy providers in like circumstances? Probably, but not certain.
• Are different types of clean energy providers (e.g., solar vs. wind) in like circumstances? Probably, but not certain.
Adaptation-related policies• The need for such policies in
future is clear, but the specifics are hazy
• IPCC: African agriculture “severely affected” by changing weather patterns. In some countries 50% of rainfed ag gone by 2020.
• IPCC: Himalayan glacial retreat to affect 1.3 billion people. Indus, Ganges, Brahmaputra to become seasonal by 2035. Mekong, Yangzi, Yellow rivers also affected.
• IPCC: Sea level rise to create 35m refugees in Bangladesh delta by 2050.
Adaptation-related policies• It’s not clear what types of policies
will be needed. Among them might be:• Water rationing or reallocation:
expropriation concerns, fair and equitable treatment.
• Energy access requirements: performance requirement restrictions.
Conclusions• Climate change will dictate the
need for policies with significant economic impacts.
• IIAs have the potential to restrict some of the policies governments might want to take.
• Conflict is not necessary, with proper foresight and knowledge.
• Central message: IIAs do matter.
Thank you
Aaron Cosbeyacosbey@iisd.ca