UN World Investment Report 2010 - Office of Trade Negotiations

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the above typology of low-carbon foreign
investment applies equally well, with appropriate
modifications, to both equity and
non-equity forms of TNC participation.
For example, the notion of technological
upgrading of operations to reduce GHG
emissions can be readily applied to buildoperate-transfer
(BOT) projects. 12
Thirdly, while a TNC can reduce GHG emissions
in facilities it owns or runs, it can also
influence emissions along its value chain
(fig. IV.1). Suppliers in a host country, for
instance, can be persuaded or supported to
switch to low-carbon technologies in order
to reduce GHG emissions associated with
the TNCs’ inputs. TNCs can also work to
help reduce GHG emissions in their customers’
operations. They usually are in a better
position to provide technological support
to their suppliers and customers than local
companies, and – in the context of international
value chains – may also be more
likely to do so in order to meet demands
for low-carbon products from their final
customers in developed countries. Moreover,
TNCs may be more advanced in reducing
GHG emissions than their local suppliers
and customers, which may result in these
local partners modifying their technology
accordingly.
2. The demand for low-carbon
foreign investment by sector
The climate change
debate is framed in
terms of sectors, 13
An effective way
of leveraging the
contribution of
TNCs to lower GHG such as power, trans-
emissions is to channel portation, buildings
low-carbon foreign and agriculture, which
investment into key are deemed significant
sectors with high in achieving GHG
mitigation potential.
emission reductions.
These sectors offer a
concrete framework within which low-carbon
investments – domestic and foreign – are
defined and required to meet GHG emission
World Investment Report 2010: Investing in a Low-Carbon Economy
challenges; and host countries, including
those who themselves are not large emitters
of GHGs, can use this as a basis to assess
the likely impact and net benefits of foreign
investment relative to other options.
The main sectors which dominate GHG
emissions – and hence require the attention
of policy-makers in order to reduce these
emissions – are sectors where TNCs play
a strong role as emitters (i.e. power and
industry), sectors where emissions largely
result from consumption and public use (i.e.
transport, buildings and waste management)
and sectors where emissions are due to
changes in land-use such as deforestation
and land degradation (i.e. forestry and agriculture).
These sectors – which represent
areas of GHG emissions rather than economic
areas – are based on the classification used
by the Intergovernmental Panel on Climate
Change (IPCC) in their Fourth Assessment
Report (IPCC, 2007).
Emissions vary substantially across these
sectors, and their relative weight will continue
evolving over time. Estimated annual
global emissions by sector in 2030, using
the business-as-usual scenario described
in box IV.3, 14 are presented in table IV.1.
The mitigation potential in each sector
is estimated taking into account existing
technologies and emitting entities, and the
additional investment needed to achieve this
potential is then calculated. Some sectors,
such as power, are projected to be among
the largest emitters of GHGs in 2030, but
their impact can potentially be mitigated
more cost effectively than in other sectors,
such as transport.
The types of low-carbon foreign investment
described in the previous section carry varying
relevance across emission sectors. Much
of the potential demand for foreign investment
focusing on low-carbon processes,
for example, lies in sectors where TNCs
themselves are major emitters relative to
other entities, essentially power and industry