6 - Investor-State Dispute Settlement in Renewable Energy: Friend or Foe to Climate Change?

Summary

The development of renewable energy is an important tool to limit greenhouse gas emissions. How the investor-state arbitration tribunals are dealing with renewable energy investment cases can influence the future growth of the renewable energy sector, creating an impact on our efforts to tackle climate change. This chapter analyses renewable energy investment cases that have arisen in Europe and North America. It considers the valuable experiences from a policy perspective which can be drawn from these cases. These cases involve application of provisions prohibiting expropriation and granting the investor fair and equitable treatment, which involve considerations of government policies. As a capital-sensitive and relatively new industry, the renewable energy sector needs government subsidies to compete with traditional fossil fuel. On the other hand, the renewable energy sector changes swiftly due to the advancement of technology, and states have found it difficult to calculate the precise level of subsidies that gives renewable energy the same level of competitiveness but without making it rely on state subsidies to make a profit. Finally, implications of these cases for climate change are analysed.