Publications

Trade and Investment Rules for Energy

II. Promoting Energy-related Investments

Recommendations

Given the critical role of energy investments in global economic development, the following list of principles should be considered by governments for follow-up action as appropriate.

• It is recognized that energy-related investments entail long-term commitments of capital, with extensive upfront planning including preparations for and participation in environmental assessments, infrastructure development, and a range of other matters preliminary to the actual energy investment.
   
• Governments should commit to ensuring full protection for energy investors and investments in accordance with broadly recognized international standards for "direct" energy investments as well as "indirect" investments that, while not an integral part of the capital project, may be materially related to the core investment activity.
   
• The pre-investment phase is an important first step in energy development. Recognizing that circumstances differ from project to project, governments should consider developing benchmarks to assist in identifying pre-investment activity that is a legitimate part of an energy investment and entitled to protection under accepted international standards.
   
• Given the long-term nature of energy investments, governments should commit to fair and equitable treatment in accordance with international standards over the entire investment period, including, where appropriate, in the pre-investment phase. To this end, governments should ensure that all measures and polices governing energy are based on accepted international norms, including full disclosure, transparency, and non-arbitrary treatment.
   
• Governments should also recognize that GATT type standards of non-discrimination, both national treatment and Most Favoured Nation (MFN) treatment, are vital components of stable and reliable energy investment regimes. In applying these obligations, special care should be taken to ensure that the "like circumstances" requirement does not open avenues of discriminatory treatment to foreign-based energy investors and investments.
   
• Governments, in consultation with the energy industry, should also consider ways to make international dispute settlement mechanisms more flexible, less costly, more efficient, and more effective to the benefit of both host States and the energy industry at large.
   
• Recognizing that States have sovereign rights to regulate their own economies, and taking into  account the legitimate need for GHG emission reduction policies,      governments should work with WEC to    establish guidelines for distinguishing measures that cross the line from legitimate regulation to "creeping" or de facto expropriation.
   
• As the global community grapples with climate change, including the post-2012 regime under the UNFCCC and the Kyoto Protocol, governments should ensure that carbon emission reduction measures do not discriminate against foreign energy investments. In this respect, national GHG reduction measures should not be applied in a differential or discriminatory manner to foreign energy investments or investors, and national treatment requirements should be fully respected.