Hafiz MIRZA. UNCTAD, Switzerland

Transcription

1 FDI, Climate Change and Development: Conceptual Issues and Recent Trends Hafiz MIRZA Division i i on Investment t and Enterprise UNCTAD, Switzerland

2 Low-carbon FDI: some conceptual issues Sustainable FDI FDI to support sustainable socio-economic development Green FDI Most relevant to countries with lowfdi which is sensitive carbon emissions, but to a wide set of other environmental concerns (water supply, environmental issues toxic waste...) Low-Carbon FDI FDI to reduce intensity of carbon emissions Most relevant to countries with high carbon emissions, including emerging economies Horizon A. Countries with low carbon emissions, but able To gain through h (FDI related to) carbon trading, Export of low-carbon (clean) Resource-based goods and services (inc. power)...but environmental & social concerns Horizon B. Countries using FDI to support low carbon economies, with a view to establishing green credentials for exports of industrial goods and services through global value chains (inc. outward FDI and other TNC activity) 2

3 Types of low-carbon investment/fdi Low-carbon investment in processes, products and services or technology solutions 3

4 Demand for low-carbon foreign investment Emissions are classified into a number of sectors with which TNCs are related in different ways Power and Industry Transport, buildings, and waste management Agriculture and forestry Direct emissions occur in TNCs foreign operations. Low-carbon process foreign investments required. Emissions arise from the use of TNCs products by consumers. Low-carbon product and services are in demand. Emissions from changing land-use patterns. TNCs impact these emissions through their interaction with suppliers.

5 Drivers of TNCs low-carbon investment abroad Home market and trade conditions Limited home markets for low-carbon products and services Green branding strategies Home government policies Incentives, tax and trade policies supporting overseas investment in lowcarbon production Specific environmental regulations Costs of production High costs of salient skilled labour High energy costs in home economy Business conditions Public opinion or shareholder pressure encouraging low-carbon investments throughout global operations 5

6 Locational determinants of low-carbon investments worldwide General policy framework Market-seeking motives Natural resourceseeking motives Efficiency-seeking motives Energy policy (renewables) Environmental and climate change policies Markets for low carbon products Including services and energy Access to sun, wind etc. Access to precious metals Technology upgrades of affiliates Local low-carbon inputs Strategic-asset t t seeking Access to technology motives Business facilitation measures Participation in clusters Investment promotion Aftercare 6

7 Policies to attract low-carbon FDI Policy framework Power Generation Energy policy Market creation policy International investment agreements Economic determinants energy market (by motivation) Efficiency seeking Business facilitation Market seeking Large market/ policy initiated renewable Regional grid infrastructure Natural resource seeking Sun, wind, water, geothermal resources Strategic asset seeking Appropriate electricity infrastructure Investment incentives Investment promotion Information service provided National CDM/JI institutions Manufacturing Industrial policy/trade measures Requirements in market creation policy (for generation) Market seeking Large market/ policy initiated renewable energy market Efficiency seeking Better deployment of global resources Availability of skilled labor Strategic asset seeking Participation in low-carbon clusters to benefit from knowledge, technology and manufacturing base in the host country Investment incentives Investment promotion 7

8 Low-carbon FDI in three key areas Alternative/renewable electricity generation Recycling Manufacturing of environmental technology 8

9 FDI in low-carbon business is growing rapidly FDI flows in alternative/renewable electricity i generation, recycling, and manufacturing of environmental technology products alone reached some $120 billion in Some 40% of low-carbon FDI projects, by value, during were in developing countries. Established TNCs are major investors, but new players are also emerging. TNCs from other industries are expanding into lowcarbon business areas. About 10% of identifiable low-carbon FDI projects in were generated by TNCs from developing and transition economies, many targeting g other developing countries. 9

10 The potential of low-carbon FDI is vast The continuing transition to a low-carbon economy requires huge additional investments in all sectors By 2030 additional investments to maintain GHG emissions at current levels are estimated to be in the region of $1 trillion per annum (with some variation depending on the methodology used). If FDI flows remain at the current level l of 15% of global l investments, an appreciable share of these additional investments will be by TNCs. Most likely the FDI share of global investments will be higher. TNCs also invest through non-equity modalities, such as build-own-operate, contract farming and franchising arrangements so low carbon foreign investment as a whole will be greater than low-carbon FDI alone. As developing countries take a greater share of global GDP, this will also be reflected in low-carbon foreign investment into the South. 10

11 The pros and cons of low-carbon FDI for developing countries Pros: o Investment and technology opportunities o Strengthened productive capacity and export competitiveness o Technological leapfrogging o First-mover advantages o Export opportunities Cons: o Crowding out of domestic companies o Technological dependency o Related social consequences 11

12 Low-carbon technology dissemination: building an effective interface between TNCs and local enterprises Technology targeting Promoting technology through linkages Boosting absorptive capacity of local l enterprises 12

13 Final remarks... The global policy debate on tackling climate change is no longer about whether to take action. It is now about how much action to take and which actions need to be taken and by whom. The current national and international policy frameworks are do not target the private sector and TNC contributions appropriately, sufficiently or effectively Low-carbon foreign investment can be leveraged better 13