Greenhouse Gas Emissions & Value Chains
To plan for the decarbonization of mineral and industrial value chains, we need good data. However, a multitude of methods exist for accounting greenhouse gas (GHG) emissions. In the absence of a verifiable, comparable, and widely adopted emissions reporting framework, companies, investors, consumers, and governments cannot track embodied emissions of key materials and products throughout their value chains.
Launched in 2020 at the World Economic Forum in Davos, Switzerland, the Coalition on Materials Emissions Transparency (COMET) is an initiative between CCSI, RMI, and the Payne Institute for Public Policy at the Colorado School of Mines. COMET is developing a universal GHG accounting framework for materials supply chains, to provide the robust, consistent, and comparable emissions data needed. The COMET Framework, leveraging existing methods, will work across all materials and include sector-specific guidance. It will cover direct and indirect emissions (scopes 1, 2, and 3), considering the full life cycle of a material no matter where it was produced.
Climate Change & Energy
Associated petroleum gas (APG) is often flared or vented, causing health and environmental challenges and wasting a valuable non-renewable resource. CCSI proposed a policy framework for APG that provides guidance for regulators, policymakers, and industry leaders seeking to develop practical approaches to unlock its economic value, improve energy efficiency, expand access to energy, and contribute to climate change mitigation. The framework aims to contribute to the World Bank’s Zero Routine Flaring by 2030.
CCSI is developing a time series of country-specific life-cycle greenhouse gas (GHG) emissions for the oil refinery and retail sectors since 1980 in 83 countries. Our forthcoming study, sponsored by the MacArthur Foundation, will also reveal the contribution of six major oil companies to GHG emissions, based on their sales volumes, refinery throughputs, and operating locations. Read more about the project.
Investment & Trade Law & Climate Policy
Growing cries for action to effectively address the climate and other environmental crises hold important implications for the governance of cross-border investments. Policymakers and environmental advocates have often overlooked how provisions granted by states in international investment agreements (IIAs) have been used by investors to challenge government measures taken in the public interest to protect the environment and advance environmental justice. This 2019 paper, published in the Sciences Po Legal Review issue devoted to the climate crisis, explains how the investor-state dispute settlement (ISDS) mechanism, made available to investors in thousands of bilateral and multilateral trade and investment agreements, may influence the future of environmental justice. A shorter version of this piece was published on the Kluwer Arbitration Blog on November 13, 2019.
Much concern has been raised regarding the possibility that measures governments take to mitigate and adapt to the impacts of climate change will conflict with their obligations under the law of the World Trade Organization. This article argues that, while it has not yet received adequate attention, the possibility that the climate change-related measures States implement will be inconsistent with their obligations under their international investment agreements (IIAs) poses a potentially greater threat of liability for governments. Although States do likely face exposure to IIA-based claims for their actions on climate change, there are strategies governments can and should pursue to minimize their potential liability.
CCSI staff wrote a chapter in the book “Trade in the Balance: Reconciling Trade and Climate Policy,” highlighting particular challenges and opportunities that international investment 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.
The special protections under international law that the Energy Charter Treaty (ECT) gives to fossil fuel investors and their investments go in the opposite direction of what is needed for the world to decarbonize its energy matrix and fight the climate emergency. This article, available in English and Spanish, discusses the efforts to reform the treaty, explains why terminating it would be a better idea, and recommends withdrawing from it and neutralizing its survival clause as a second-best strategy.
Alongside preparing for climate change, Africa should invest in the zero-carbon future, avoiding locking itself into the declining fossil fuel–based economy while taking advantage of the opportunities presented by decarbonization. However, investment treaties and investor–state dispute settlement (ISDS) hinder, rather than catalyze, the transition to climate-friendly investment opportunities. This blog explores the effects of investment treaties on climate action by looking at the Energy Charter Treaty (ECT), extrapolates these lessons to other treaties, and concludes with ideas for climate-aligned investment governance.
The message is by now clear: our global economy must be fundamentally reoriented and redeployed in order to achieve the SDGs and the commitments of the Paris Climate Agreement. This requires action by all stakeholders, including non-financial and financial firms, debt and equity investors, government policymakers, and consumers. In terms of the amount of money required, it has been estimated that meeting the SDGs will require $5 to $7 trillion annually, with investment needs for developing countries amounting to roughly $3.3 to $4.5 trillion per year. While a big picture view of and strategic thinking regarding the entire economic ecosystem is necessary to generate such investments, this paper, produced in conjunction with the UN Inquiry into the Design of a Sustainable Financial System, focuses on the actual and potential role of one type of financial flow—FDI—in achieving the transition to a low-carbon, just, and sustainable world and, more specifically, FDI flows into developing countries.
The European Union (EU)'s proposed Carbon Border Adjustment Mechanism (CBAM) would impose a carbon price on EU imports to address concerns about competitiveness and carbon leakage. It tends to prompt reactions in developing as well as developed countries, whether by enacting similar unilateral measures or initiating disputes at the World Trade Organization (WTO) to challenge its compatibility with international trade rules. Its creation also stresses the need for a harmonized carbon accounting methodology to measure the carbon footprint of traded materials and products. CCSI and partners co-hosted an interactive expert panel on economic, legal, political, and carbon accounting aspects of the EU CBAM and similar mechanisms that may be created elsewhere to combat the climate emergency. Learn more by watching the video recording and reading the report of the event.
Aligning investment treaties with sustainable development means, among other things, catalyzing relevant investment that otherwise would not happen, and ensuring that treaties identify and avoid or mitigate environmental, social and other harms that may be caused by the investments that the treaties support or induce. To advance understanding of these issues, CCSI organized and hosted a two-day workshop: Policy Reset: Debating Proposals for a More Planet-Friendly Trade Model. This multi-stakeholder workshop, which took place on February 23-24, 2017, focused on (1) collecting input on the Sierra Club’s proposed climate-friendly approach to trade and investment treaties; and (2) identifying lessons learned from roughly 20 years of experience with governments including environment- and labor-related provisions in their investment treaties.
Climate Change & Land
Finding ways to integrate climate considerations and climate services into investment decision-making and governance can help governments, communities, and investors better prepare for the challenges posed by climate change.
Land rights is a critical component of climate mitigation, while climate adaptation will require new approaches to land use and governance. Through convenings, research, and support, we work to improve understanding and practice.
Land-intensive climate solutions, such as solar and wind energy, are a crucial component of the transition to a low-carbon future, yet if not done right, they risk undermining rights and project failure. We’re taking lessons from other land-based investments to help renewables investments avoid common pitfalls.
Any discussion on climate change and sustainable investment in natural resources must grapple with land—a complicated yet crucial component of the search for equitable climate change solutions. In the context of resource investments, land is deeply entwined with both climate change impacts and climate change actions. This blog argues for greater consideration of land rights and land use in climate policy conversations.
Climate Change & Mining
Domestic laws are the ideal legal instrument to regulate the mining sector’s contribution to climate change mitigation and adaptation. Even so, as a stop-gap-measure, governments may consider updating model mining development agreements (MMDAs) or negotiating climate-related contractual provisions. This CCSI paper explores whether governments are using, and how they can use, investor–state mining contracts to advance climate goals. We synthesize our findings and recommendations for six categories of provisions: integrating renewable energy into mining products, reducing deforestation, requiring a climate risk assessment and community vulnerability assessment, regulating water use, requiring tailings dam design justifications, and integrating climate risks into closure plans.
The Africa Mining Vision (AMV) provides guidance for the industrialization of African countries by leveraging their mining sector. However, it does not include guidance on how governments should embrace the climate change agenda. The localization of global value chains induced by rising carbon costs can represent an opportunity for better and further industrialization, deeper linkages, and sustainable development. CCSI's research explores these opportunities and suggests foundations for a climate-smart update of the AMV.
As we seek to meet the challenges of climate change impacts, many commodities will play an increasing role in decarbonizing economies. There are increasing challenges of addressing the emissions from extraction of these commodities needed to support the zero-carbon transition. CCSI, in a consortium with Carbon Trust, RMI, and the Payne Institute for Public Policy at the Colorado School of Mines, is working on the development of the IFC Net Zero Roadmap for Critical Minerals to support the nickel and copper mining sectors in taking collective, coordinated action by providing a clear, approachable, and accepted roadmap for decarbonization. The project was commissioned by the International Finance Corporation (IFC) and the International Council on Mining and Metals (ICMM), as part of the World Bank Group’s Climate-Smart Mining initiative.
Training on Extractive Industries & Climate Change
Since 2017 CCSI has integrated climate change as one of the core modules in its executive training on extractive industries and sustainable development. The session provides an introductory overview of the climate change impacts and the Paris Agreement. It gives an overview of various policy developments that have driven and will continue to drive the energy transition, as well as how the private sector is responding. The session then reviews the impacts of the energy transition on extractive industry investments and resource-rich developing countries.