CYIL vol. 13 (2022)

MONIKA FEIGERLOVÁ CYIL 13 ȍ2022Ȏ Nonetheless, as opposed to previous preambular prerogatives referring purely to economic development, newly adopted international investment agreements have started to refer to sustainable development. 40 Generally, the concept of sustainable development does not form part of the definition of investment. Treaties that endorse non-investment values such as sustainable development seek to deprioritise investment protection as a principle objective and suggest other values which are to inform the interpretation of relevant provisions by arbitral tribunals in the sense of Article 31(1) of the Vienna Convention on the Law of Treaties. Finally, it is noteworthy that new treaties tend to cover both the pre-establishment phase of investment and the traditional protection of established investors. The regulation of market access through the IIAs underlines the importance of and potential in defining the appropriate investment to be attracted by the host State, i.e., investment that contributes to decarbonisation, achievement of sustainable development goals, or climate-neutral economy. Green Investment The next question that arises is how can we define ‘green investment’ in the IIAs. Traditionally, international investment agreements have been technology blind and have not distinguished between low carbon and high carbon investments. Even energy agreements such as the ECT have made no distinction between fossil fuels and renewables in terms of their protection. Distinguishing among low and high carbon investment was not part of the modernization process of the ECT at the beginning. The approach chosen by the ECT reformers in 2021 was to exclude certain categories of investment from the coverage of protection by the ECT. 41 The ECT Secretariat’s recent communication on the ‘agreement in principle’ on the modernized ECT indicates that negotiations concerning the definition of ‘Economic Activity in the Energy Sector’ did focus on an evaluation of business activities and on how investments in different sources of energy should be protected in light of the clean energy goals of the ECT’s contracting parties. 42 The new instrument should, to a certain extent, differentiate among technologies and sources of energy. Protection of existing investments in coal, oil, and fossil gas shall be gradually phased out among ECT’s contractual parties that will participate in the so-called flexibility mechanism. 43 Existing fossil fuel investments would benefit from ECT’s protection for ten years after the entry into force or the provisional application of the amendment to the ECT, but no longer than 31 December 2040. New investments, i.e., investments in fossil fuels made after the entry into force of the revised ECT, would not be protected by the ECT anymore. 44 The definition of the ‘Energy Materials and Products’ is extended to cover the capture, utilisation, and storage of carbon dioxide (CCUS) in order to decarbonise the energy systems. 40 Ibid., pp. 569–571. 41 EU additional submission to its text proposal for the modernization of the Energy Charter Treaty. (undated). Accessible at: https://trade.ec.europa.eu/doclib/docs/2021/february/tradoc_159436.pdf. 42 Energy Charter Secretariat, Public Communication explaining the main changes contained in the agreement in principle. 24 June 2022, CCDEC 2022 10 GEN. 43 Ibid. 44 The agreement in principle, however, anticipates exceptions for specific investments in qualified projects generating electricity from gas and in qualified pipelines, which would continue to benefit from the ECT protection under fulfilling certain conditions either until 31 December 2030, or for ten years after the entry into force of the amendments to the treaty (but not later than 31 December 2040).

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