Simplifying the Pathway to 2030; an investment treaty exclusively for climate-related investment

Co-authors: Reg Fowler and Michael Putra

Summary

Climate change and the energy transition present a wicked problem, a multifaceted issue which cannot be addressed by a single solution, necessitating difficult trade-offs. Private investment in the energy transition is especially exposed to policy risk, and therefore deserves investment protection. Investment treaty reform and retrenchment create uncertainty. The authors propose a multilateral investment treaty which exclusively protects investments which qualify as contributing to the host state’s nationally determined contributions under the Paris Agreement (“NDCs”) in a publicly transparent manner. The investor will be protected against the impact of host state’s dilution or deferral of its NDC implementation plans, provided that the relevant investment is meeting its pre-agreed technical objectives. The purpose is to incentivise climate change related private investment as swiftly as possible, on “future proof” terms, without complicating negotiations by introducing measures to deter fossil fuel investment or resolve
longstanding debates on investor-state dispute settlement.

Full contribution can be accessed on page 103 from the following document:

https://www.oecd.org/investment/investment-policy/OECD-investment-treaties-climate-change-consultation-responses.pdf