Energy Investment

Between now and 2030, it is projected that more than $20 trillion dollars will need to be invested in new energy infrastructure to meet future demand. More than half of this investment will be needed by developing countries.[1] The nature of these investments will play a critical role in shaping the world's energy and greenhouse gas emissions profiles. As such, there is a pressing need to encourage direct foreign investment in clean energy infrastructure—investments that lead to more energy generation while reducing the carbon footprint of energy—particularly in developing countries.

IISD is currently examining how international investment regimes influence the potential for encouraging clean energy investments. Our study asks where the barriers and opportunities are for ensuring that investments in energy infrastructure make a strong contribution to sustainable development. The issue is being examined along two parallel tracks—international and domestic.

At the international level, the study is focused on understanding how international investment agreements might foster or frustrate clean energy investments. The Energy Charter Treaty, North American Free Trade Agreement, Economic Community of West African States (ECOWAS) Energy Treaty, and the U.S.-Argentina bilateral investment treaty are each being assessed.

The national level analysis is examining host country institutions related to energy infrastructure, including legal and regulatory regimes. Some of the barriers being examined include trade and fiscal policy restrictions, utility and site issues, lack of information, lack of grid access and subsidies for fossil fuel industries. Potential remedies identified thus far include unbundling energy sector monopolies and granting subsidies and rebates for clean energy. The research will conclude by asking whether any of the domestic level remedies envisioned might conflict with provisions of international investment agreements.

This research is expected to be completed during the summer of 2008.

[1] 2006. World Energy Outlook.