Jorge E. Viñuales

Modelling complex systems of heterogeneous agents to better design sustainability transitions policy

This article proposes a fundamental methodological shift in the modelling of policy interventions for sustainability transitions in order to account for complexity (e.g. self-reinforcing mechanisms, such as technology lock-ins, arising from multi-agent interactions) and agent heterogeneity (e.g. differences in consumer and investment behaviour arising from income stratification). We first characterise the uncertainty faced by climate policy-makers and its implications for investment decision-makers. We then identify five shortcomings in the equilibrium and optimisation-based approaches most frequently used to inform sustainability policy: (i) their normative, optimisation-based nature, (ii) their unrealistic reliance on the full-rationality of agents, (iii) their inability to account for mutual influences among agents (multi-agent interactions) and capture related self-reinforcing (positive feedback) processes, (iv) their inability to represent multiple solutions and path-dependency, and (v) their inability to properly account for agent heterogeneity. The aim of this article is to introduce an alternative modelling approach based on complexity dynamics and agent heterogeneity, and explore its use in four key areas of sustainability policy, namely (1) technology adoption and diffusion, (2) macroeconomic impacts of low-carbon policies, (3) interactions between the socio-economic system and the natural environment, and (4) the anticipation of policy outcomes. The practical relevance of the proposed methodology is subsequently discussed by reference to four specific applications relating to each of the above areas: the diffusion of transport technology, the impact of low-carbon investment on income and employment, the management of cascading uncertainties, and the cross-sectoral impact of biofuels policies. In conclusion, the article calls for a fundamental methodological shift aligning the modelling of the socio-economic system with that of the climatic system, for a combined and realistic understanding of the impact of sustainability policies.

Foreign Investment and the Environment in International Law

Introductory observations Part I. Setting the Framework: 1. The increasing interactions between foreign investment law and international environmental law 2. Conceptualising interactions 3. Synergies 4. Conflicts I - soft-control mechanisms 5. Conflicts II - adjudication mechanisms Part II. Normative Conflicts: 6. Normative priority in international law 7. Foreign investment and the international regulation of freshwater 8. Foreign investment and the protection of biological and cultural diversity 9. Foreign investment and the international regulation of dangerous substances and activities 10. Foreign investment and the climate change regime Part III. Legitimacy Conflicts: 11. Normative priority between different legal systems 12. Environmental measures and expropriation clauses 13. Environmental measures and non-discrimination standards 14. Environmental measures, stability and due process 15. Defence arguments based on environmental considerations Concluding observations.

The Rise and Fall of Sustainable Development

Sustainable development is turning brownish. Too many disparate initiatives are being conducted under its banner. The concept of sustainable development no longer provides an adequate umbrella for the main challenge currently faced by global environmental governance, namely implementation. Its very strengths are turning into fatal weaknesses. Vague enough to bring all States and other stakeholders to the negotiating table, the concept of sustainable development was very successful in managing the political collision between ‘development’ and ‘environment’ throughout the 1980s and the 1990s. It was a formidable tool to find balance as well as for normative development. But it is inadequate to navigate the implementation phase. This article introduces an alternative model, based on four strategic priorities (participation, differentiation, decarbonisation, innovation and technology diffusion). It maps different levels at which these priorities could be pursued in order to make global environmental governance more effective. The article is not against the concept of sustainable development as a worthy ‘fight’. It is about the need to use another ‘weapon’ to spearhead efforts to meet the challenge of implementation.

Environmental impact assessment for climate change policy with the simulation-based integrated assessment model E3ME-FTT-GENIE

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agenda setting, which has now been mostly established, to impact assessment, in which we identify policy pathways to implement the Paris Agreement. Most integrated assessment models currently used to address the economic and technical feasibility of avoiding climate change are based on engineering perspectives with a normative systems optimisation philosophy, suitable for agenda setting, but unsuitable to assess the socio-economic impacts of a realistic baskets of climate policies. Here, we introduce a fully descriptive, simulation-based integrated assessment model designed specifically to assess policies, formed by the combination of (1) a highly disaggregated macro-econometric simulation of the global economy based on time series regressions (E3ME), (2) a family of bottom-up evolutionary simulations of technology diffusion based on cross-sectional discrete choice models (FTT), and (3) a carbon cycle and atmosphere circulation model of intermediate complexity (GENIE-1). We use this combined model to create a detailed global and sectoral policy map and scenario that sets the economy on a pathway that achieves the goals of the Paris Agreement with >66% probability of not exceeding 2

Balancing Effectiveness and Fairness in the Redesign of the Climate Change Regime

^\circ

Climate policy after the Paris 2015 climate conference

C of global warming. We propose a blueprint for a new role for integrated assessment models in this upcoming policy assessment context.

The foundations of international investment law : bringing theory into practice

Since its modern inception in the 1960s, international environmental law (IEL) has faced three main challenges: (A) justifying the need for an international regulation of environmental issues (legitimacy); (B) finding mechanisms to ensure compliance with IEL (effectiveness); and (C) distributing equitably the benefits and burden of environmental protection (fairness). While it is nowadays possible to say that the legitimacy of IEL is no longer in question, the need to respond to challenges (B) and (C) has never been more pressing. This is particularly the case in the context of the redesign of the climate change regime (CCR), as the responses to (B) and (C) may conflict with each other. Industrialized countries who historically contributed the most to the artificial increase in greenhouse gases (GHG) in the atmosphere have been matched, and even surpassed, in their level of GHG emissions by countries such as China, India or Brazil, who are now being pressed to undertake real emissions reduction commitments. Historically, however, none of these latter benefited from the emission laxity characterizing the XIX and most of the XX century to further their development. While imposing specific emissions reduction commitments on them would seem unfair, such commitments are nevertheless critical for the effectiveness of the regime both directly and indirectly (as without such commitments, industrialized countries may be reluctant to join or uphold a regime).The purpose of this article is to spell out in an orderly analytical manner the types of issues that must be addressed in seeking a balanced solution. This type of analysis can be conducted from several perspectives. The most directly relevant disciplines to deal with fairness considerations are admittedly ethics and political philosophy, and there is indeed a growing literature on climate fairness. Although this literature is briefly surveyed, the article focuses on the fairness dimensions of the existing legal arrangements or those currently being negotiated. There is a considerable gap between the theoretical approaches to climate fairness and the manner in which considerations of fairness operate in practice. This gap is mainly due to the need to account for political considerations or, in other terms, to balance fairness with political effectiveness. When such considerations are taken into account, the picture that emerges is quite different. The CCR is not built upon a single approach to fairness. Rather, fairness considerations are integrated through a patchwork of criteria used to distribute different objects (burden of emission reductions, emission rights, contribution to financial and technological assistance, and access to such assistance) among different actors situated at different levels.

Harnessing foreign investment to promote environmental protection : incentives and safeguards

The landmark 2015 Paris Agreement, adopted to widespread acclaim at the 21st Conference of the Parties (COP 21) to the United Nations Framework Convention on Climate Change (UNFCCC), reflects profound political cleavages and tensions, which were already condensed, even camouflaged, in the wording of the mandate that launched the negotiations, as set out in the 2011 Durban Platform for Enhanced Action. Of particular note are the opaque formulations defining both the mandate assigned to negotiators to work on ‘mitigation, adaptation, finance, technology development and transfer, transparency of action, and support and capacity building’ and the target outcome, potentially consisting of a ‘protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties’. Writing in hindsight, the authors of this Editorial would have hoped to be able to comment on how these many tensions were settled and perhaps solved. But this is, alas, not possible, at least not yet. Rather than settled, the tensions arising in many – perhaps most – major issues, ranging from mitigation to adaptation to the different avenues to promote implementation (above all finance) were instead ingrained into the text of the Paris Agreement, leaving them to be resolved (perhaps) through the instrument’s future operation. The wide diversity of possible interpretations of so many different parts of the Paris Agreement is clearly reflected in the contrasting views expressed in the articles of this guest-edited issue of Climate Policy. The range of interpretations was even wider in the conference held at the University of Cambridge, on 22 January 2016, from which several of these articles are derived. Such diversity may in turn be diversely interpreted. But in the opinion of the authors of this Editorial, this is worrying, because it has the potential to obfuscate, at least for now, attempts at answering the main question raised by COP 21: how confident can we be that the Paris Agreement has set the world on a path that will eventually avoid dangerous climate change? Not all the diverging views expressed and discussed at the Cambridge conference – and indeed in the wider commentaries and debates that have emerged since Paris – can be addressed in one guestedited issue. Before turning to those that are indeed encompassed here, it is worth highlighting one key tension that is hidden in both the wording of the Paris Agreement and the difference between the two global temperature targets referenced (albeit in different ways) in that agreement, namely,

Macroeconomic impact of stranded fossil fuel assets

PART I: THE PLACE OF INVESTMENT LAW AMONG INTERNATIONAL REGIMES PART II: CONCEPTUAL FOUNDATIONS OF INVESTMENT LAW PART III: MANAGING REGIME STRESS WITHIN INVESTMENT LAW

Diplomatic and judicial means of dispute settlement

Introductory observations Pierre-Marie Dupuy and Jorge E. Vinuales Part I. Protecting the Environment in the XXI Century: The Role of the Private Sector: 1. International Environmental Law: looking at the past to shape the future Pierre-Marie Dupuy 2. The private sector and the challenge of implementation Francesco Francioni 3. The political environment of environmental law Urs Luterbacher 4. The applicability of international environmental law to private enterprises Sandrine Maljean-Dubois and Vanessa Richard 5. Economics of green economies: investment in green growth and how it works Timothy Swanson and Shaun Larcom Part II. Foreign Investment and Environmental Protection: Incentives: 6. Key instruments of private environmental finance: funds, project finance and market mechanisms Magnus Jesko Langer 7. The potential of international climate change law to mobilise low-carbon foreign direct investment Daniel M. Firger 8. Channelling investment into biodiversity conservation: ABS and PES schemes Riccardo Pavoni 9. The role of insurance risk transfer in encouraging climate investment in developing countries Swenja Surminski 10. Trade-related incentives: the international negotiations over environmental goods and services Konstantina Athanasakou Part III. Foreign Investment and Environmental Protection: Safeguards: 11. The environmental regulation of foreign investment schemes under international law Jorge E. Vinuales 12. From corporate social responsibility to accountability mechanisms Elisa Morgera 13. Beyond law as tools: foreign investment projects and the contractualisation of environmental protection Natasha Affolder 14. Socially responsible investing through voluntary codes Benjamin J. Richardson 15. The enforcement of environmental norms in investment treaty arbitration Zachary Douglas Concluding observations Pierre-Marie Dupuy and Jorge E. Vinuales.