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Time frame: February 2007 to July 2008
Summary: Through the Energy Investment project, IISD undertook an assessment of international investment regimes to determine where the barriers and opportunities lie for ensuring that investments in energy infrastructure make a strong contribution to sustainable development.
Funders: Netherlands Ministry for Social Building, Regional Planning, and Environment Administration; Danish Ministry of Foreign Affairs
In 2007 the International Energy Agency projected that more than US$22 trillion would need to be invested in energy supply infrastructure between 2005 and 2030, more than half of it in developing countries. The nature of these investments is expected to play a critical role not only in the development paths of those countries but also in shaping the world's energy and greenhouse gas emission profiles. Therefore on both environmental and development grounds there is a pressing need to encourage investments in clean energy infrastructure—investments that lead to more energy generation while reducing the carbon footprint of energy—at levels that dwarf the status quo.
Addressing climate change, of course, will take more than this. The world must pursue conservation and energy efficiency, particularly in developed countries, and the patterns of consumption that drive global energy demand must change. We will also need new technologies. IISD’s Energy Investment study focused on only one aspect of what must be a larger solution, which is also the area of clearest synergy for environment and development: the massive flows of investment needed in clean energy infrastructure.
IISD's Energy Investment project pursued this issue along two related tracks: international and domestic. At the international level the project focused on understanding how international investment agreements might foster or frustrate clean energy investments. In the first phase of the work, IISD examined the standard elements of investment treaties, using the Energy Charter Treaty and the Economic Community of West African States (ECOWAS) Energy Protocol as in-depth case studies.
The second phase of work undertook national-level analyses that probed host-country institutions related to energy infrastructure, including legal and regulatory regimes. The barriers found here comprised a familiar list of general investment-climate issues, supplemented by issues of particular concern for clean energy investment—regulatory and fiscal treatment primary among them. Two countries in the former Soviet Union (the Ukraine and Kazakhstan) (PDF - 1 MB) and Nigeria (PDF - 1.7 MB) served as country case studies to inform this work.
The report Clean Energy Investment contains a synthesis of the project’s research findings at the international and national levels. Written by Aaron Cosbey, Jennifer Ellis, Mahnaz Malik and Howard Mann, the report synthesizes lessons learned regarding the barriers and opportunities for clean energy investment in developing countries. It focuses first on the domestic side, looking at those elements of the domestic regulatory and policy framework that might encourage or discourage both foreign and domestic investment. It then looks at the web of international investment laws embodied in bilateral, regional and multilateral treaties, asking how they might impede or foster clean energy investment.
Finally, the project has published a Clean Energy Investment Policymakers’ Summary.