Climate Change and International Investment Agreements: Obstacles or opportunities?

By Aaron Cosbey, Deborah Murphy, Fiona Marshall on June 29, 2010
Climate change presents a challenge unprecedented in human history. In November 2007, the International Panel on Climate Change (IPCC) released its fourth assessment report, in which it concluded that warming of the climate system is now unequivocal. It also stated that investment has an important role to play in addressing this challenge. A 2008 technical paper by the United Nations Framework Convention on Climate Change (UNFCCC) estimated that additional investment and financial flows of US$200-210 billion would be necessary globally in 2030 to return global greenhouse gas (GHG) emissions to current levels.

However, while investment has a key role to play in meeting this challenge, the international treaties that often govern foreign direct investment may in fact work against this objective or, at best, may miss important opportunities to contribute positively. This paper examines the extent to which international investment treaties may in fact help or hinder host states' efforts to mitigate and adapt to climate change. It also considers how future international investment agreements might be designed to support a host state's climate change objectives, including through promoting investment which does so.

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IISD, 2010