Abstract

The unprecedented investment gap in energy transition requires businesses to invest more in cleaner energy systems. These investments must be focused on carbon-critical countries if the world is to see change at the required scale and pace. A growing number of businesses and investors are persuaded, but they lack the certainty necessary to justify taking the economic and political risks inherent in energy transition investment. Preserving or enhancing investment protection (“the incentive”) is more important than eliminating protection of fossil fuel investments (“the disincentive”), because it is easier to align States around the design of the incentive than to compromise on the terms of the disincentive. Trying to combine incentives and disincentives will only delay the maximum benefit the investment protection may offer. Humanity is at risk of delaying the solution while it seeks to resolve yesterday's investment protection controversies. This paper proposes a Climate Change Investment Treaty, focused on carbon-critical countries to help navigate the wicked problem that is the energy transition.

This paper will be part of the second TDM Special Issue on "International Investment Arbitration - Environmental Protection and Climate Change Issues". More information here www.transnational-dispute-management.com/news.asp?key=1893