Abstract
In 2015, States concluded the landmark Paris Agreement, which committed to a long-term goal of “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. The Paris Agreement galvanises all signatory nations in a common cause — combating climate change and adapting to and investigating its effects, and with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort.
The goals of the Paris Agreement will only be achieved through massive investment in pursuit of a common objective. According to the International Finance Corporation, an estimated US$90 trillion investment is required to implement the Paris Agreement. The current regime of international investment agreements (IIAs) provides an invaluable opportunity to promote the investment required to achieve the Paris Agreement objectives, including mitigation, adaptation and transition from fossil fuels. However, users must take care to ensure that investment is, in fact, protected and encouraged, and to maintain critical progress in promoting international climate change policy.
ICSID is one of the five arms of the World Bank Group, which recognises that “[c]limate change is a threat to the core mission of the World Bank Group”. The ICSID Convention is also designed to promote international private investment. As such, ICSID sits at an important nexus in this discussion.
This article: (i) provides an overview of several influential arbitration decisions relating to international environmental disputes, and the way in which the existing climate change regime uses arbitration as a dispute resolution mechanism; (ii) examines the evolution of investment treaties, prior decisions, especially in the field of renewable energy, and the tools available within IIAs for tribunals to promote the Paris Agreement objectives; (iii) discusses what arbitral institutions have done to date, in terms of tools, procedures, rules and other mechanisms, to promote climate change expertise and facilitate the resolution of disputes in a way that is consistent with climate change concerns; and (iv) considers ICSID's position as an arm of the World Bank, particularly in light of the WBG Climate Change Action Plan commitment to scaling up climate action and aligning internal processes with intentionally agreed climate change goals.
