International Investment Agreements: Impacts on Climate Change Policies in India, China and Beyond

Mitigating and adapting to climate change will require a fundamental reorientation of our global economy as we move away from fossil fuels and transition to a low carbon and climate-resilient world. This reorientation depends on government actions to help catalyze and channel financial flows in new directions and away from business-as-usual practices.International investment agreements (IIAs) – treaties that now number over 3,000 and have the objective of promoting and protecting cross-border investment flows_could potentially play a key role in these efforts to scale up and (re)direct investments to meet climate change mitigation and adaptation needs. As presently drafted and interpreted, however, these IIAs represent a missed opportunity to advance climate change solutions and, worse, may even frustrate them. Due to the daunting amount of investment needed for mitigation and adaptation, and the consequent mandate for governments to be strategic in closing financing gaps, it is necessary to critically assess the climate-policy consistency of IIAs and (re)shape them accordingly.This paper examines these issues. Beginning with a brief overview of IIAs and the challenges and opportunities they can pose for climate change policy generally, this paper then highlights particular challenges and opportunities these agreements pose for climate policy in China and India. When analyzing the relationship between IIAs and climate change, these two countries are important to examine because of their significant modern contributions and vulnerabilities to climate change; their active yet divergent approaches to IIAs; and their dual roles as hosts of considerable inward investment and homes to a large and growing cadre of major outward investors. The issues China and India face in terms of the intersections of climate policy and investment law are not entirely unique to them, but are especially visible. This visibility presents important examples of how current legal frameworks may hinder, but could be harnessed to advance, national action on climate change mitigation and adaptation.