Climate change and foreign investment law policy are gradually merging, according to a study by the Vale Columbia Center on Sustainable International Investment.
The report, edited by Karl Sauvant, founder and executive director of the Vale Columbia Center, said that while clean development mechanisms have been in place for years, it is much more recently that the international community has turned to low-carbon FDI and away from “command and control” regulation as the preferred means to achieve a reduction in greenhouse gas emissions.
States have begun to renegotiate international investment agreements or sign new treaties that take into account policy goals and extend beyond investor protection.
Mr Sauvant cited examples such as the US-China Framework for Ten Year Co-operation on Energy and Environment and regional accords such as the Asia-Pacific Partnership on Clean Development and Climate. In addition, both the 2009 Copenhagen Accord and the 2010 Cancun Agreements call on developed country governments to mobilise billions of dollars in private financing for climate mitigation projects in the developing world, while largely avoiding the imposition of concrete caps on emissions as they did under the Kyoto Protocol.
He said: “The sorts of investment promotion strategies emphasised in these initiatives tend not to conflict with states’ international investment law obligations, as do many forms of traditional environmental regulation.
“Rather, the benefits of a clear, stable and predictable policy framework for low-carbon FDI become even greater as states seek to facilitate sustainable development through private investment.”