Available at: https://pubs.iied.org/17660iied

SUMMARY: Global efforts to combat climate change will require a transition to renewable energy and government action to reduce reliance on fossil fuels such as coal, oil and gas. If followed through, such action will create stranded assets – in other words, economic assets affected by premature write-downs or downward revaluations, or converted to liabilities.

To protect their assets from measures to phase out fossil fuels, foreign investors may resort to investor-state dispute settlement (ISDS), which allows them to bring disputes to an international tribunal and sue states over conduct they believe breaches investment protection rules, and to obtain compensation if the claim is successful. Even in the absence of legal proceedings, the explicit or implicit threat of recourse to ISDS can provide leverage to the fossil fuel industry and strengthen its position in negotiations with governments over possible compensation. As a result, more public funds may be spent on compensating the fossil fuel sector than would otherwise be the case, making it more costly for states to take energy transition measures.

This report develops a framework for assessing the extent to which energy transition measures could result in ISDS claims; explores the extent to which treaties with ISDS protect foreign-owned coal plants worldwide; and provides policy recommendations to help states preserve their ability to facilitate the low-carbon energy transition.

Available at: https://www.iisd.org/itn/2020/06/20/valuing-fossil-fuel-assets-in-an-era-of-climate-disruption/

There have been more than 150 known ISDS cases brought by claimants whose businesses involve extracting, transporting, refining, selling, or burning fossil fuels for electricity. Some of these cases have been triggered by measures aimed at addressing climate change; others have been brought in response to environmental measures more broadly; some have arisen from disputes regarding the distribution of public and private costs and benefits from extractive industry projects; and others have been triggered by different scenarios, including contract disputes between host state-owned firms and foreign investors. Seven of the top 10 all-time largest ISDS awards (according to UNCTAD data)—all exceeding USD 1 billion—have been granted in cases involving fossil fuel investments.

Available at: https://www.clientearth.org/latest/documents/potential-solutions-for-phase-3-aligning-the-objectives-of-uncitral-working-group-iii-with-states-international-obligations-to-combat-climate-change/

The United Nations Commission on International Trade Law (UNCITRAL) Working Group III has a broad mandate to work on possible reform of investor-state dispute settlement (ISDS). The Working Group has completed Phase 1, in which governments identified and considered concerns regarding ISDS, and Phase 2, where participating governments debated whether reform is desirable in light of those concerns. The third and final phase will involve the development of potential reform options. As the process moves forward, it is essential for the Working Group to consider an expansive range of proposals that will preserve the regulatory space required by states to ensure consistency and coherency with their international obligations to achieve the Sustainable Development Goals and the targets that states have committed to under the 2015 Paris Climate Agreement. The present briefing seeks to assist governments in identifying all potential solutions for reform in this regard.

Available at: https://www.routledge.com/Routledge-Handbook-of-Global-Environmental-Politics/Harris/p/book/9781032145808

This handbook brings together leading international academic experts to provide a comprehensive and authoritative survey of global environmental politics.

Fully revised, updated and expanded to 45 chapters, the book:

• Describes the history of global environmental politics as a discipline and explains the various theories and perspectives used by scholars and students to understand it.

• Examines the key actors and institutions in global environmental politics, explaining the roles of states, international organizations, regimes, international law, foreign policy institutions, domestic politics, corporations and transnational actors.

• Addresses the ideas and themes shaping the practice and study of global environmental politics, including sustainability, consumption, expertise, uncertainty, security, diplomacy, North-South relations, globalization, justice, ethics, public participation and citizenship.

• Assesses the key issues and policies within global environmental politics, including energy, climate change, ozone depletion, air pollution, acid rain, transport, persistent organic pollutants, hazardous wastes, rivers, wetlands, oceans, fisheries, marine mammals, biodiversity, migratory species, natural heritage, forests, desertification, food and agriculture.

This second edition includes new chapters on plastics, climate change, energy, earth system governance and the Anthropocene. It is an invaluable resource for students, scholars, researchers and practitioners of environmental politics, environmental studies, environmental science, geography, globalization, international relations and political science.

ABSTRACT: Nationalization was once anathema to neoliberals and the hydrocarbon-based corporations long closely integrated with the neoliberal project. Indeed, the origins of neoliberal advocacy for global economic liberalisation can be traced, at least in part, to the resistance of oil multinationals to nationalist governments attempting to assert ownership and control over natural resources. It is therefore striking that calls are now mounting from this quarter for the nationalization of fossil fuel infrastructures, to keep them operating as climate policy, loss of public legitimacy and changing market conditions increasingly make investments in them unprofitable, uninsurable, or uncompetitive. The Canadian government’s purchase of the Trans Mountain Pipeline exemplifies what we term a ‘neoliberal nationalization’. Neoliberal pundits and oil industry figures created the perception of both an immediate economic crisis and a longer-term crisis of investor confidence in Canada; these ‘crises’ were used to justify the nationalization. Critically, the government acquisition of the pipeline was framed as a temporary measure of last resort. The intention of a neoliberal nationalization is to protect corporate actors from the effects of their own irresponsible business practises, maintaining ‘business as usual’ by pre-emptively socializing the foreseeable risks of rapid capital asset devaluation. In the case of hydrocarbon infrastructures like Trans Mountain, state authority is called upon to ensure the continued profitability of private fossil energy extraction, even as global financial markets accelerate disinvestment from the sector in response to evidence that most fossil fuels must remain in the ground to prevent catastrophic climate change.

DOI: https://doi.org/10.4337/9781784714635.00018

ABSTRACT: In the past decade, the ‘green economy’ has become an increasingly important, albeit contested, concept in international policy discussions. While investment law has not figured prominently in these discussions, a number of commentators have made the claim that investor-state dispute settlement (ISDS) could help facilitate the transition to a green economy by supporting renewable energy investment. In this chapter, the theoretical basis for such a claim is evaluated and several ISDS cases concerning investments in wind energy (Canada) and solar power (Spain) are discussed. The chapter concludes that even if one adopts a very narrow conception of a green economy, the case for ISDS to play a positive role in its development is weak. There is little evidence to suggest a constructive role for ISDS in theory, and in practice the need for wind and solar investments to receive special protection from investment treaties is limited and declining.

ABSTRACT: Global energy governance has received increased attention from scholars and policymakers in recent years. Much of the discussion has focused on the inadequacy of the current institutional architecture, particularly in light of the urgent need to decarbonize energy systems. However, little attention has been given to the capacity of global institutions to promote investment in renewable energy. This article considers claims by proponents of the Energy Charter Treaty, the most developed trade and investment treaty in the global energy architecture, that it can play an important role in this regard. Specifically, it examines the ECT’s investor-state dispute settlement mechanism. Drawing on scholarship in global governance, law, and economics and an analysis of recent investor-state disputes, the article argues that there are problems with the assumptions underlying the claims of the ECT’s proponents. Critically, there is still a lack of evidence that the ECT has a positive impact on flows of investment in any sector, including the renewable energy sector. There is also a risk that ISDS could be used by the fossil fuel industry to impede a clean energy transition. States should approach accession to the ECT with caution and consider other mechanisms to reduce risk for renewable energy investors.

ABSTRACT: The system of investor-state dispute settlement (ISDS) found in over 3,000 bilateral investment treaties and numerous regional trade agreements has been criticized for interfering with the rights of sovereign states to regulate investment in the public interest, for example, to protect the environment and public health. This article argues that while much of the public debate around ISDS has focused on a small number of cases that have arisen over the regulation of tobacco packaging, there is a far greater threat posed by the potential use of ISDS by the fossil fuel industry to stall action on climate change. It is hypothesized that fossil fuel corporations will emulate a tactic employed by the tobacco industry – that of using ISDS to induce cross-border regulatory chill: the delay in policy uptake in jurisdictions outside the jurisdiction in which the ISDS claim is brought. Importantly, fossil fuel corporations do not have to win any ISDS cases for this strategy to be effective; they only have to be willing to launch them. The article concludes with three options to reform trade and investment agreements to better align them with climate change mitigation efforts: (i) exclude ISDS provisions; (ii) prohibit fossil fuel industries from accessing ISDS; or (iii) carve out all government measures taken in pursuit of international obligations (for example, under the Paris Agreement on climate change) from challenge under ISDS.

ABSTRACT: This book is about the forces that are reshaping the international law on foreign investment today. It begins by explaining the liberal origins of contemporary investment treaties before addressing a current backlash against these treaties and the device of investment arbitration. The book describes a long-standing legal-intellectual resistance to a neo-liberal global economic agenda, and how tribunals have interpreted various treaty standards instead. It introduces our reader to the changes now taking place in the design of a range of familiar treaty clauses, and it describes how some of these changes are now driven not only by developing and emerging economies but also by the capital-exporting nations. Finally, it explores the life, career and writings of Muthucumaraswamy Sornarajah, a scholar whose work has been dedicated to the realisation of many of these changes, and his views about the hold global capital has over legal practice.