Energy Charter Treaty's Investor Protection Provisions: Potential to Foster Solutions to Global Warming and Promote Sustainable Development

Abstract:     
The Energy Charter Treaty (ECT) is the only multi-lateral treaty that deals specifically with the energy sector. It must be carefully reviewed to see if it can play a role in addressing climate change. The importance of international investment in the energy sector in the developing countries has been a theme of the discussions on climate change for many years. The developing countries are rapidly becoming major sources of GHG emissions with China surpassing the United States in emissions in 2007. There is a consensus that enormous investments in the developing countries will be required to foster the development of clean sustainable energy to arrest the increase in GHG emissions and avoid the worst case climate change scenarios. The Kyoto Protocol which set binding GHG limits for the industrialized countries for the 2008-2012 period does not set binding emission reduction targets for the developing countries. The developing countries, most recently at the UN conference in Bali in December of 2007, have steadfastly refused to be bound by GHG emissions caps and have instead remained committed to the principle of common but differentiated responsibilities as defined in the United Nations Framework Convention on Climate Change. It behooves the developing countries to combat climate change by fostering foreign investment to mitigate GHG emissions in their countries. Consideration should be given to whether the developing countries should be urged to accede to the ECT, in its current or modified form, and whether such accession would contribute significantly to the attractiveness of investment in the developing countries and serve to reduce the cost of such investments making more investment possible.

Keywords: Energy Charter Treaty, climate change, global warming, greenhouse gas, Kyoto protocol, United Nations Framework Convention on Climate Change, UNFCC, Investment treaty, investment state arbitration, international investment protection, BIT, China, emissions caps, foreign investment

JEL Classifications: L98, K42, K33, F42, F21, F02

Accepted Paper Series