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Investment Disputes in the Renewable Energy Sector

On 5 September 2022, the United Nations Conference on Trade and Development (UNCTAD) released a new IIA Issues Note taking stock of publicly known arbitral proceedings in investment disputes that may be relevant to climate action, dividing them into three groups: environmental, renewable and fossil fuel-related disputes.

The Issues Note considers the Energy Charter Treaty (ECT) as the most frequently invoked agreement for “environmental” cases, which UNCTAD considers are cases “against measures that are related to environmental protection” (using a “wide working definition of the term” according to UNCTAD). However, the Issues Note clarifies that the group of “environmental” cases includes cases that “challenged measures related to regulatory changes for renewable energy production” (therefore, cases that are included in the third group, “renewable energy cases”). In fact, only in 3 ECT cases (not in 80 as mentioned in the Issues Note) measures related to environmental protection and fossil fuels are argued and challenged; the other cases mentioned are related to “renewable energy”.

The Issues Note further lists “at least 80 cases” in the “renewable energy” category, including 72 cases under the ECT. However, the latest ECT statistics (as of 1 June 2022) identify 91 ECT cases (60% of overall ECT cases) related to renewable power generation. According to publicly available information, none of these cases challenges measures taken for protecting the environment, particularly climate action; they predominantly relate to regulatory changes in economic incentive schemes for renewable energy production. 

The Secretariat is working jointly with the World Bank on developing tools for preventing and mitigating investment disputes related to the renewable energy sector. In doing so, the Secretariat has identified 119 arbitral proceedings in disputes with foreign investors related to renewable energy between 1998 and February 2022 (several of which have been settled). A joint report will be published soon.